Oil Rises to a Record After Pickens Says Prices May Reach $150

Crude oil rose above $129 a barrel in New York for the first time after billionaire hedge-fund manager Boone Pickens said that oil will reach $150 a barrel this year.

Prices will climb because supply isn’t keeping up with demand, Pickens, the founder and chairman of Dallas-based BP Capital LLC, told CNBC today. Oil advanced on May 16 when Goldman Sachs Group Inc. boosted its estimate for the second half of the year to $141 a barrel, from $107, citing supply constraints.

``There is so much momentum in the market that it doesn’t take much for prices to reach new records,’’ said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Kentucky. ``We rose today after Boone Pickens basically parroted the Goldman line on prices.’’

Crude oil for June delivery rose $1.82, or 1.4 percent, to $128.87 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Futures reached $129.31, the highest since trading began in 1983. Prices are 98 percent higher than a year ago.

Credit Suisse Group AG and Societe Generale SA raised their oil prices forecasts for 2008 and 2009 in reports today, citing investor flows and supply limitations.

Brent crude oil for July settlement rose $2.05, or 1.6 percent, to $127.11 a barrel on London’s ICE Futures Europe exchange. The contract touched a record $127.49 today.

Oil prices also rose because the dollar weakened against the euro, prompting investors to buy commodities as a hedge against the currency’s decline. The euro gained after an adviser to the German government said European policy makers may increase interest rates as soon as the financial crisis ends.

German consumer prices rose 2.6 percent in April from a year earlier after jumping 3.3 percent the previous month, the most in 12 years. German producer-price inflation accelerated to 5.2 percent in April, the fastest in almost two years, the Federal Statistics Office said today. The European Central Bank aims to keep inflation in the euro region just below 2 percent.

``Oil is up because the dollar is being pounded on the bigger-than-expected increase in German inflation,’’ said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``The likelihood that the ECB will cut rates to be more in line with those in the U.S. is reduced by the German inflation numbers.’’