Oil hits record $US129 high
Pastor Dale Morgan
*Oil hits record $US129 high*
From correspondents in New York
May 21, 2008 06:16am
Article from: Agence France-Presse
OIL soared to a record above $US129 a barrel today as worries about US
tensions with Iran heightened speculative fever in a market driven by
concerns about tight global supplies and strong demand.
New York's main oil futures contract, light sweet crude for June
delivery, traded as high as $US129.60 before pulling back slightly to
close at $US129.02 a barrel, up $US2.02 on yesterday's close.
London's Brent crude contract for July leapt $US2.78 to settle at
$US127.84 a barrel after briefly hitting a new all-time high of $US128.07.
Oil prices have jumped more than a quarter since the start of 2008, when
they struck $US100 a barrel for the first time. Also driving the market
in recent weeks has been unrest in OPEC member Nigeria, which is also
Africa's biggest exporter of oil.
The jump in oil prices will force the price of petrol at local pumps
well over $1.50 a litre and towards $2 a litre, as motorists line up for
the cheapest prices at the bowser.
Eric Wittenauer, analyst at Wachovia Securities, said reports about
growing tensions between Washington and Tehran heightened concerns about
a conflict that could affect the oil-rich Middle East.
He said the market reacted to an article in the Jerusalem Post that said
US President George W. Bush "intends to attack Iran before the end of
his term".
"We have certainly not ruled out the possibility of conflict later this
year," Mr Wittenauer said.
The market also responded to oil supply disruptions in France and OPEC's
unwillingness to hike output, analysts said.
"Overall, (oil) market participants are currently choosing to focus on
the supply side, with investors doubting that robust demand for
distillate fuels from Asian, Middle Eastern and other emerging market
economies would be met with enough supply," said Sucden analyst Andrey
Kryuchenkov.
French fishermen demanding state aid to cope with soaring fuel costs
blockaded France's largest Mediterranean oil depot at Fos-sur-Mer today,
escalating a 10-day protest movement.
Around 50 fishermen used tyres and crates to set up roadblocks cutting
access to the Fos-sur-Mer depot, causing a traffic jam of some 100
tanker trucks that were lined up waiting to enter.
Bank of Ireland analyst Paul Harris meanwhile said that OPEC's refusal
to consider output levels before a meeting in September was "further
weighing on supply concerns and adding to upward price impetus".
OPEC president Chakib Khelil said yesterday the oil cartel would take no
decision on output levels before a meeting in September despite calls by
the United States for a hike to dampen soaring prices.
Mr Khelil said that he did not expect output to be increased, stressing
that "current prices are not based on (traditional) supply and demand".
Many officials belonging to the Organisation of the Petroleum Exporting
Countries argue that record oil prices are being driven by speculators
rather than investors reacting to the actual supply-demand balance.
Weakness in the dollar has also supported prices, with commodities
priced in the US currency becoming cheaper for holders of stronger
currencies.
Mr Bush, during a visit to Saudi Arabia last Saturday, pressed the
world's biggest oil producer to increase output to help cool runaway
prices that are fuelling inflation and weighing on economic growth in
the United States and other countries.
Saudi Arabian Oil Minister Ali al-Nuaimi said the kingdom had increased
oil production by 300,000 barrels per day from May 10 in response to
orders from customers, mostly from the United States.