July 3, 2008 / 6:38 AM / 12 years ago

Oil tops $145 ahead of U.S. holiday

NEW YORK (Reuters) - Oil hit a record above $145 a barrel on Thursday ahead of the Independence Day holiday weekend in the United States before paring gains as the dollar recovered from a two-month low.

A motorist prepares to put fuel into her car at a petrol station in Melbourne July 3, 2008. REUTERS/Mick Tsikas

U.S. light sweet crude oil for August delivery was trading at $144.35 a barrel, up 78 cents at 6:52 p.m. British time after earlier hitting a record $145.85. London Brent was trading $1.03 higher at $145.29 after reaching $146.69 a barrel.

“We pushed to a new high early and then backed off from that on some light profit-taking ahead of the long weekend that was encouraged by the strength that we’ve seen in the U.S. dollar,” said Tim Evans, energy analyst for Citi Futures Perspective in New York.

U.S. payroll data released Thursday suggested the job market had not deteriorated as much as many investors had feared, helping the dollar recover from a two-month low against the euro hit earlier in the day.

Comments from the head of the European Central Bank that suggested further interest rate increases in Europe could be put on hold also supported the greenback.

Oil has risen nearly 13 percent since the start of June on concerns about Middle East tensions, tight supplies and investors buying crude as a hedge against inflation and the falling value of the dollar.

Saudi Oil Minister Ali al-Naimi reiterated his belief on Thursday that the current rally in oil prices was being propelled by speculators rather than any shortage of crude oil.

Naimi repeated promises that Saudi Arabia would pump more oil if there was demand for it.

Oil refiners in the United States and Asia have said official Saudi prices make it uneconomical to buy more barrels.

Iran has threatened to block oil shipments through the Strait of Hormuz in the event it is attacked. Speculation has mounted in recent weeks that Israel may be preparing a pre-emptive strike against Tehran’s nuclear program.

Approximately 40 percent of the world’s seaborne crude oil trade passes through the Strait of Hormuz.

Tropical Storm Bertha, which formed on Thursday in the eastern Atlantic Ocean, was not expected to strengthen into a hurricane or threaten any U.S. oil and gas production facilities in Gulf of Mexico.

Hurricane experts have predicted an above-average number of storms and hurricanes through the U.S. hurricane season, which began June 1 and runs through the end of November.

Additional reporting Robert Campbell in New York, by Ikuko Kao and Alastair Sharp in London and Chua Baizhen in Singapore; editing by Marguerita Choy

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