- Title: VARIOUS: Oil price hits new high
- Date: 10th May 2008
- Summary: (BN11) LONDON, UNITED KINGDOM (FILE) (REUTERS) VARIOUS OF MAN FILLING CAR WITH PETROL
- Embargoed: 25th May 2008 13:00
- Keywords:
- Topics: Energy
- Reuters ID: LVACDZASWO3BIR2JG6IGW92IML7F
- Story Text: Oil hits a new peak above 126 U.S. dollars a barrel and a senior analyst in London says he doesn't expect it to fall any time soon.
Oil hit a new peak above 126 U.S. dollars (USD) on Friday (May 9), the fifth straight session of record gains in a market given an additional spur by tight supplies of diesel.
U.S. crude for June delivery rose 1.32 dollars to 125.01 by 1455 GMT, off a record high of 126.20 dollars a barrel. London Brent crude rose 2.01 dollars to 124.85.
Gas oil futures, the benchmark for European heating oil and diesel contract, also surged to a new record high on Friday, driven by worries about tight global diesel supplies and many energy analysts don't expect prices to retreat any time soon.
Howard Wheeldon, senior strategist at BGC Partners in London, said on Friday: "I don't think we will see the sort of collapse that we had after the first and second major rises of oil back in the 1980s and '90s. That won't happen. I think we will keep rising at a slower pace until we get to around 146, 150 dollars a barrel. That's a long way off. That may take about two years to get there, but I do believe that that is the way the price of oil is heading."
Gains in U.S. crude picked up momentum after a fall in distillate stocks in the United States, notably.
The U.S. government said on Wednesday (May 7) that domestic distillate stocks, which include heating oil, fell by 100,000 barrels in the previous week to 105.7 million barrels, against forecasts for an 800,000-barrel rise.
The tightness in distillates was also highlighted after Royal Dutch Shell looked set to shut its second-largest crude distillation unit and two secondary facilities at its Singapore plant in June for routine maintenance.
Strength in middle distillates has been aggravated by growing demand for transport fuel in Europe and power demand in emerging economies, where shortages of other fuels have set off a boom in demand for diesel for use in electric generators.
Oil's relentless rise has once again turned the spotlight on the Organisation of the Petroleum Exporting Countries (OPEC), which has for months resisted demands for more oil to try to tame prices and safeguard economic growth.
Wheeldon commented: "We've coped amazingly well over the last two years, where we've seen the price of oil move from 50 dollars, up to the current 124-plus. We've managed it. There is a different use of oil. Companies have adapted, countries have adapted. But at some point we do tip over where oil does become a serious deterrent to economic growth. I think we're probably very close to that stage now."
An OPEC source said on Friday that the exporters' group might consider whether to boost output before its next scheduled meeting, if crude oil prices keep rising.
OPEC Secretary-General Abdullah al-Badri said on Thursday that world markets have enough supply now, but the organisation is willing to pump more if it is needed to keep pace with demand. - Copyright Holder: FILE REUTERS (CAN SELL)
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