oil price climbs towards $a100

Oil soars after $A dips
MANDI ZONNEVELDT
31mar06
petroleum

OIL prices climbed towards $A100 a barrel yesterday, helped by the weaker Australian dollar.

Santos managing director John Ellice-Flint predicted the price of the fuel would remain high.

Sweet crude closed at $US66.45 a barrel in New York or a record $A94.16.

The Asian benchmark Tapis, on which Australian prices are based, was trading at $US67.98 or $A95.90.

Oil hit a record $US70.85 a barrel on August 30 last year after Hurricane Katrina halted production in the Gulf of Mexico. However, the Australian-dollar price for oil only reached $A93.37, with the Australian dollar then trading at US74.91.









Australia's dollar has fallen more than 5 per cent this month and the weaker currency makes US-dollar-denominated products such as oil more expensive here.

In the Santos annual report released yesterday, Mr Ellice-Flint says market indicators suggest oil prices could remain high in the medium term. "Supply from some traditional sources in the Middle East is slowing through dwindling reserves or production interruptions in Iraq and other traditional suppliers," he says.

"(Meanwhile) growth in demand for crude oil continues unabated, with China among the major drivers."

Oil has been trading at two-month highs amid supply concerns, with militant attacks in Nigeria and the nuclear stand-off with Iran.

Mr Ellice-Flint says that "in a world where political and security uncertainty prevails", the market outlook for natural gas and crude oil augurs well for Santos because Australia is a reliable trading partner.