Oil and rice scale new highs

Sydney: Oil and rice hit record highs on Tuesday, leading gains for commodities as supply concerns intensified while concerns about the US economy and fresh doubts about credit markets eroded confidence in the dollar.

The move back into commodities also lifted gold and other agricultural products.

US crude rose $1.80 to $113.56 a barrel at 1405 GMT, after touching a record high of $113.93.

Oil is up about 18 per cent from the start of the year and is averaging near $100.

London Brent crude was up $1.91 at $111.75, after a record high of $111.85. The May Brent futures contract expired yesterday.

"One thing that is clearly driving the oil price is that the US dollar has gotten substantially weaker in the past several months and quarter," said Richard Batty of Standard Life.


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Opec, which pumps more than a third of the world's oil, says it is producing enough and that a US economic slowdown may weaken consumption in the second quarter.

"Current Opec production at more than 32 million barrels per day will be sufficient to both meet demand growth and contribute to further stockbuilds," the Opec said in its latest Monthly Oil Market report.

Tetsu Emori, fund manager at Astmax Co Ltd, said prices had risen due to automatically placed buying orders once the previous record had been breached.

He sees the next resistance target at $115.

Chicago Board of Trade July rice futures rose to $22.025 a hundredweight in Asian electronic trading after jumping by the 50-cent limit on worries about global supply the previous day.

The tight supply picture was reinforced after Indonesia announced it will curb medium-grade rice exports in an effort to combat inflation, joining other countries seeking to protect domestic supplies.

At the same time the Philippines has said it will enter the market for another 500,000 tonnes in May, the second such tender in as many months as it looks to lock in 2008 requirements ahead of the typically lean third quarter.

Meanwhile, British Prime Minister Gordon Brown urged oil producing countries to act to counter high prices.

Brown, who is due to travel to Washington today for talks with US President George W. Bush, said he planned to discuss collective action to bring down oil prices.