Business | Oil & Gas
Oil surges more than $10 to record over $138
Oil jumped $10 to a record over $138 a barrel on Friday, extending a two-day rally to more than $15 on the slumping US dollar and rising tensions between Israel and Iran.
- Reuters
- Published: 23:17 June 6, 2008
- Oil has surged this year in part due to an influx of cash from investors seeking a hedge against the weaker dollar and inflation.
- Image Credit:
New York: Oil jumped $10 to a record over $138 a barrel on Friday, extending a two-day rally to more than $15 on the slumping US dollar and rising tensions between Israel and Iran.
Morgan Stanley forecast falling US inventories could send US crude to $150 a barrel by July 4 amid signs record high prices at the pump are already cutting into demand at the start summer vacation driving season in the world's top consumer.
US crude gained $10.28 to $138.07 a barrel by 2:20 p.m. EDT (1820 GMT), adding to gains of more $5.49 on Thursday. London Brent crude rose $9.66 to $137.20.
Oil has surged this year in part due to an influx of cash from investors seeking a hedge against the weaker dollar and inflation.
The greenback weakened against other currencies on data showing the US economy lost jobs for the a fifth straight month and the unemployment rate shot up to its highest in more than three years.
The drop added to losses from Thursday when European Central Bank President Jean-Claude Trichet said a number of policymakers wanted higher interest rates -possibly as soon as next month.
Further support came from remarks by Israel's transport minister that an attack on Iran's nuclear sites looked "unavoidable," the most explicit threat yet against Tehran from Prime Minister Ehud Olmert's government.
Worries of a potential disruption of the Opec member's crude supply have helped support prices over the past year.
Morgan Stanley forecast the diversion of Middle East oil shipments away from the United States to Asian markets could push US crude to a $150 a barrel by the US July 4th holiday.
The report added to a string of upward price forecast revisions by analysts, with Goldman Sachs in May predicting prices could tip $200 a barrel within the next two years.
A six-year rally in oil has sent prices up six-fold as demand from emerging economies such as China and India strain supplies.
High prices have started to eat away at global growth however, with some consumers such as the United States and the United Kingdom showing signs of lowering consumption.
Some Asian governments - including India - have decided to cut fuel subsidies, stirring concern rising prices could cut further into demand.
The International Energy Agency (IEA), an adviser to 27 industrialised countries, said it may cut issues its latest its 2008 demand growth projection further after having already more than halved it to 1.03 million barrels per day (bpd).
Opec ready to intervene
Meanwhile, Nigeria said that Opec is ready to intervene to cool world oil prices, which the cartel insists are not driven by market fundamentals, but sees no immediate need to increase supply, Nigeria's Oil Minister Odein Ajumogobia said on Friday.
Ajumogobia said the weakening dollar and fears of a future supply gap were responsible for the record high oil prices.
"Opec has consistently said they are monitoring the market and if there is any need to intervene ... some Opec members will be able to pump some more oil into the market," he said.
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