Oil at record near $140 a barrel
Pastor Dale Morgan
Oil at record near $140 a barrel*
BBC - The price of crude oil has hit a new high of close to $140 a
barrel in New York trade, despite Saudi Arabia agreeing to increase
output in July.
US light crude rose to $139.89 a barrel, surpassing the previous high of
$139.12 on 6 June.
The price later fell 25 cents to $134.61 at the end of New York trade.
On Sunday, Saudi Arabia said it would boost production by 200,000
barrels a day next month to meet growing worldwide demand.
That would make a total rise of 550,000 barrels a day, or over 6%, since
May and would take Saudi output to its highest monthly rate since August
1981.
The news was announced after UN Secretary General Ban Ki-Moon met Saudi
Oil Minister Ali al-Naimi in Jeddah for talks on the high oil price.
The market has got it in its head that we are about to run out of oil,
and is looking for negative news
John Hall, oil analyst
Last month, Saudi Arabia increased its production by 300,000 barrels a day.
The country is thought to be the only oil producer with the ability to
pump substantially more crude.
It argues that the current high prices are caused by speculators rather
than any shortage of crude oil.
Oil prices had fallen by almost $2 on Friday after reports that Saudi
Arabia might boost oil production but many believe that this pledge is
too little too late to bring down oil prices.
Extremely volatile
"If they'd have said this six months ago, it might have had some
effect," said oil industry expert John Hall.
Oil expert talks about the reasons behind the high price
"But the market has got it in its head that we are about to run out of
oil, and is looking for negative news."
"The market is extremely volatile at the moment," he added. "Any
disruption to supply is immediately jumped on."
Speculation about the future of oil prices has been rife recently, with
some analysts predicting oil could jump to as much as $200 a barrel
during the next 18 months.
Israeli threats to strike Iran over its nuclear programme have also
helped fan the flames.
Movements in the currency markets on Monday also triggered the latest
price spike, with the dollar weakening against the euro and subsequently
making oil cheaper for investors dealing in other currencies.
Meanwhile, Norwegian oil firm StatoilHydro saw oil and gas production
temporarily abandoned when a fire broke out on the 90,000 barrel a day
North Sea platform.