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| Oil prices continue upward march | Oil prices continue upward march |
| (about 1 hour later) | |
| Oil prices crossed $116 a barrel for the first time after a militant group in Nigeria said it had attacked a Royal Dutch Shell-operated pipeline. | |
| The news reignited US sweet, light crude, which touched $116.10, before falling back to trade above $115. | The news reignited US sweet, light crude, which touched $116.10, before falling back to trade above $115. |
| It has been a volatile session for oil, which earlier declined about $1.40 to $113.50 a barrel in New York. | |
| The initial fall was helped by the dollar's recovery against the euro - a turn-off for oil's foreign buyers. | The initial fall was helped by the dollar's recovery against the euro - a turn-off for oil's foreign buyers. |
| Nigeria is Africa's largest oil exporter and the eighth-largest oil-producing country in the world. | |
| Rebel attacks since early 2006 on its oil infrastructure in the Niger Delta have disabled the country's normal output by as much as a quarter. | |
| Violence and political uncertainty in key oil-producing nations have helped the oil price notch up a series of records since the beginning of the year amid fears that supply will not be able to meet rampant demand from red-hot emerging economies in Asia, most notably China. | |
| Currency correlated | |
| But analysts believe the primary driver of prices has been investors piling into oil and other commodities as a hedge against the weakening US dollar, which also makes resources cheaper for foreign investors. | |
| The dollar has been tumbling since last September when the first signs that the slumping housing market threatened to wipe out profits at some of the world's largest banks became apparent. | |
| This prompted the US central bank, the Federal Reserve, to begin months of aggressive cuts to interest rates - a move that tends to hurt the value of a currency as investors switch to other currencies or investments to get a better return on their capital. | |
| But a lack of nasty surprises in banking giant Citigroup's results earlier - despite further write-downs on bad loans - helped to lift sentiment in the financial sector, and helped the greenback to recover somewhat against the euro and Japanese yen. |