Oil price soars to record above $145

NEW YORK (AP) -- Oil prices briefly soared to a new high near $146 a barrel Thursday, extending the previous day's record-shattering rally before easing somewhat as the dollar gained ground against the euro.

Light, sweet crude for August delivery added 80 cents to $144.37 on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.85 a barrel, topping a trading record set the previous day. In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $145.24, up 98 cents.

Oil prices settled at $143.57 Wednesday, up $2.60 above the previous high. They continued climbing overnight, propelled by a report of lower crude stockpiles in the United States, lingering concerns about conflict with Iran and comments by Saudi Arabia's oil minister suggesting his country would not boost production.

Prices backed off, however, after the European Central Bank did not signal more rate increases. That decision, which followed a widely expected quarter-point rate hike meant to stem inflation in the 15-nation euro zone, led the dollar higher against the euro.

A slumping dollar has been a key driver pushing oil prices up by half this year. Many investors buy commodities such as oil as a hedge against inflation when the greenback weakens, and a falling dollar makes oil less expensive to investors overseas. When the dollar strengthens, traders have less incentive to buy commodities.

But the fact that energy prices continued to rise Thursday even as the euro slipped by nearly 2 cents at times against the dollar -- an unusually large amount -- underscored just how bullish traders have become in recent months.

"The strength in crude oil is amazing given the price of the euro," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com.

Oil prices are also rising because investors have been pumping more money into the commodity to compensate for what are perceived to be anemic returns elsewhere, analysts say. The major stock market indexes are all down by double digits since the start of the year.

At the same time, recent saber-rattling in the Middle East has left the markets jittery. And many traders are concerned that there simply is not enough oil in the short term to quench rising global demand -- even without a conflict that could disrupt supplies.

"There's a whole lot of thinking right now that prices haven't risen high enough to meet demand growth," Cordier said.

Speaking Thursday in Madrid, Saudi Arabia's oil minister said the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so.

Ali Naimi said he was "concerned about the (price) level" and suggested Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, the minister told reporters, "all our buyers are satisfied and happy."

The U.S. government issued more troubling economic news Thursday, reporting that employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses.

But because the jobs report was largely in line with what analysts expected, it "had little-to-no impact" on oil prices, said Addison Armstrong, director of market research at Tradition Energy.

Traders were also keeping an eye on storms brewing offshore.

A system developing near the Cape Verde Islands off the western coast of Africa was upgraded to become the second tropical storm of the hurricane season, although it was expected to turn northward and avoid the oil and natural gas platforms scattered throughout the Gulf of Mexico.

"It's more of a psychological thing," Cordier said. "It reminds traders that hurricane season is ahead of us, not behind us."

In other Nymex trading, heating oil futures rose 1.82 cent to $4.0897 a gallon, while gasoline futures added 0.63 cent to $3.5557 a gallon. Natural gas futures jumped 12.7 cents to $13.516 per 1,000 cubic feet.

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