Oil galloped to a high above $135 on Thursday, extending this month’s near 20 percent rally after a sharp drop in U.S. crude stocks and the weakening U.S. dollar triggered short covering by investors.
The climb in prices, which have marked new record highs in 10 of their last 14 sessions, has set off alarm bells around the world, although OPEC has maintained that the market remains well supplied with crude and that prices are beyond its control.
The U.S. July crude contract extended Wednesday’s more than $4 surge to reach a high of $135.04 early on Thursday. By 0333 GMT it was trading up $1.41 or 1 percent at $134.58 a barrel, taking gains so far this year to over 40 percent.
"Prices are going in one direction. They are up all the way," said Gerard Rigby of Fuel First Consulting in Sydney. "The primary mover is the fall in the U.S. oil stocks, and this started a series of short covering."
U.S. crude stocks fell 5.4 million barrels to 320.4 million barrels last week, counter to expectations of a small rise in inventories, intensifying concerns about supplies in the world’s biggest consumer just ahead of the start of summer.
The drop was caused by a fall in imports to their lowest in five weeks and a pick-up in demand from refineries, the Energy Information Administration said.
U.S. gasoline supplies fell 800,000 barrels against a 700,000-barrel build forecast, while stocks of distillates -- which has been one of the market’s biggest driver this month -- rose 700,000 barrels but were 12 percent below last year.
Heating oil for June delivery reached a fresh record high of $3.9704 a gallon on Thursday, having climbed nearly 25 percent since the start of this month Heating oil for June delivery reached a fresh record high of $3.9704 a gallon on Globex on Thursday. It settled 13.34 cents or 3.53 percent higher at a record $3.9084 a gallon on Wednesday.
Investors have been drawn into oil by a weak U.S. dollar, which has made commodities relatively cheap for holders of other currencies.
The dollar fell to a one-month low versus the euro on Wednesday after the Federal Reserve cut its 2008 growth forecast and warned of higher unemployment, reducing prospects of an interest rate hike later this year.
The market has been convinced to buy oil amid a series of bullish forecasts, while the outlook for the dollar is weak, traders said.
Investment bank Goldman Sachs has said it thinks oil prices will average $141 a barrel in the second half of this year and could top $200 a barrel by 2010.
U.S. investor Warren Buffett, the world’s richest person, said on Wednesday he expects the dollar to keep falling as policies needed to correct the slide had yet to be implemented.
U.S. Energy Secretary Sam Bodman said record oil prices fairly reflect tight supplies and strong global oil demand, and speculators were not at fault for pushing up petroleum costs.
No comments:
Post a Comment