Crude Oil Strikes Another Intraday Record

Energy futures were moving higher in midmorning trading at the New York Mercantile Exchange, spurred by overnight weakness in the dollar and threatening words from Iran over the weekend that left oil traders worried about possible disruptions to global supplies.

West Texas crude for August delivery was recently gaining $1.69 at $141.90 a barrel. Earlier in the session, the contract set a new record intraday high of $143.67.

August Brent crude was up $1.78 at $142.09 a barrel. Reformulated gasoline was 2 cents higher at $3.52 a gallon, and heating oil was gaining 4 cents at $3.95 a gallon. Near-term natural gas was adding 15 cents at $13.35 per million British thermal units.

The dollar took a severe beating in overnight trading in both Asian and European markets, and although this morning the greenback retraced the losses it incurred against the euro and other major currencies, a general sense of unease was sending oil higher.

Looming over the dollar is the July 3 meeting of the European Central Bank, at which bank president Jean-Claude Trichet is expected to increase the Eurozone's benchmark lending rate. Such a move could send oil prices through the roof.

Cramer: Factors Pumping Up Oil Prices

A European rate increase would boost the demand for euros in proportion to U.S. dollars, sending the value of the dollar lower. Because oil is traded in dollars in international markets, the price of oil tends to rise when the value of the greenback falls.

Meanwhile, a leading Iranian newspaper released an article saying that Iran is prepared to take control of the key shipping lanes in the Persian Gulf's Strait of Hormuz if a military conflict with Western countries occurs. The reminder that a geopolitical conflict in the Middle East could easily shut down one of the world's main oil arteries was increasing the bullish tone in the Nymex oil pits.