LONDON (Reuters) – Oil hit a new record high above $84 a barrel on Monday, continuing its upward march as tension between Turkey and Iraq added to a rally fuelled by winter supply worries and dollar weakness.
U.S. light, sweet crude for November delivery saw its fifth straight session of gains, rising 58 cents to $84.27 a barrel by 0933 GMT, off its record high of $84.35.
London Brent crude was 62 cents higher at $81.17, off its record high of $81.26.
Prices jumped on Friday after the Kurdistan Workers Party said it would move back into Turkey from northern Iraq and target the Turkish government.
Turkish artillery fired seven to eight shells into a village in northern Iraq late on Saturday, witnesses said.
Turkey routinely shells the mountainous border region, but the latest shelling came as the government is expected to seek approval from parliament this week for a major operation against the Kurdistan rebels based in the mountains of northern Iraq.
U.S. Secretary of State Condoleezza Rice on Sunday urged restraint.
“This is one of the reasons why people are so bullish, but I don’t think it’s a main issue,” said Tetsu Emori, a fund manager at Japan’s Astmax Futures Co. Ltd.
Analysts also cited the increase in speculative buying in oil. Regulatory data released on Friday showed that speculators on the New York Mercantile Exchange crude oil market increased their net long positions in the week to Oct. 9.
“A run at $90 is now seen as reasonable,” Citigroup said in a note.
Oil has remained above $80 for most of the past month after soaring from below $70 in mid-August, fuelled by a mixture of supply concerns ahead of winter and record lows for the dollar, which has driven speculators to buy oil as a hedge.
The dollar has since recovered some ground versus the euro and yen, but some analysts say the currency outlook remains the biggest prop for prices, despite the revival of a geopolitical risk premium in a region that pumps a third of the world’s oil.