NEW YORK — Oil jumped to a record of over $126 a barrel yesterday, extending gains to more than 11 per cent since the start of the month on fuel supply concerns and a rush of speculator buying.
US crude settled up $2.27 at $125.96 a barrel before rising to a record $126.25 in late post-settlement trade.
London Brent crude gained $2.56 to settle at $125.40 a barrel, off the earlier high of $125.90.
"It appears that any calculations that included waiting for the next pullback were discarded on the European opening this morning as waves of buying materialised, particularly from speculative interests," said MF Global vice-president Mike Fitzpatrick.
Oil has surged since slipping as low as $110.53 a barrel on May 1. Investors have seized on disruptions to crude oil supplies in the North Sea and Nigeria, as well as galloping demand for distillate fuels, a category that includes diesel fuel and heating oil.
Strong demand for diesel fuel in Europe, along with the growing use of distillates for generators to supplement strained power grids in fast growing emerging markets, have cut into stocks of distillate fuel and pushed up prices sharply.
"Lingering geopolitical fears and high heating oil prices are helping the market, but the speed of the rise is too fast," said Kanetsu Asset Management analyst Tatsuo Kageyama in Tokyo.
The steady rise in crude oil prices once again has turned the spotlight on the Organisation of the Petroleum Exporting Countries (OPEC), which for months has insisted it has no control over the factors it blames for pushing up the price of oil, including speculation and the weak US dollar.
An OPEC source said the group might consider boosting output before its next scheduled meeting in September should crude oil prices keep rising.
But Ecuador's oil minister said there were no plans for an early meeting.
US President George W Bush said on Thursday he would bring up the subject of oil prices during talks with Saudi leaders during a planned trip to the Middle East.
Bush's trip to the region comes as the Iran-backed Hezbollah group seized the Muslim half of Beirut on Friday from fighters loyal to the US backed governing coalition in the worst spate of violence in Lebanon since the country's 1975-90 civil war.
Although Lebanon is not an oil producer, civil unrest there has pushed up oil prices in the past, most recently in the summer of 2006 when Israel invaded Lebanon in an unsuccessful attempt to subdue Hizbollah.
source: 9may2008
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