Supply worries push oil near $124
Pastor Dale Morgan
*Supply worries push oil near $124*
Global demand for oil has been fuelled by China and India
BBC - World oil prices have reached a new peak near $124 a barrel.
The rises came despite a US government report on Wednesday showing a
surprise increase in US crude and petrol stocks.
US sweet, light crude rose as high as $123.87, but then fell back to
$123.42, below the record set in Wall Street trade on Wednesday.
Oil prices have gained 25% in the past four months, boosted by supply
fears and speculation. Goldman Sachs warns oil could reach $200 a barrel
soon.
London Brent also rose initially, surging to $122.56, before falling
slightly.
Momentum buy
US crude stocks rose by 5.7 million barrels to 325.6 million barrels for
the week ending 2 May, a weekly US government report showed - much
better than expected.
But analysts said that traders ignored the rise and focused on other
figures, which showed a fall in diesel and heating oil inventories.
"Right now, the market is trading by momentum as market participants
tend to selectively focus on bullish news," said Victor Shum, senior
principal at Purvin and Gertz energy consultancy in Singapore.
With an increasing disconnect between the physical reality of supply and
demand and the behaviour of traders, Mr Shum considered that there was a
greater risk of a sell-off.
End of a trend?
Meanwhile, Goldman Sachs energy strategist Argun Murti said that oil
prices could top $200 a barrel in as little as six months.
Oil prices have added 400% since 2001, with traders betting that rampant
demand from China to power its economic growth will not be fully met
because of production problems in key oil-producing nations, including
Nigeria and Iraq.
The slump in the US dollar has also boosted oil prices, as it makes the
dollar-denominated commodity an attractive investment for foreign buyers.
But suggestions by analysts that the ailing US economy could be on the
brink of recovery have revived the greenback since April and helped to
halt the oil juggernaut.