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Oil prices soar to new highs as OPEC says 'no shortage'
NEW YORK
Petroleumworld.com, May 9, 2008Crude oil prices surged to new highs above 123 dollars Thursday in volatile trade after the OPEC cartel insisted the market was well-supplied and being driven by speculators.
New York's main oil futures contract, light sweet crude for June delivery, smashed its record high set Wednesday and ended at a record 123.69 dollars, a gain of 16 cents from Wednesday's close.
In after-hours deals, the New York futures contract soared to an all-time high of 124.57 dollars.
In London, the contract for Brent June delivery crossed 123 dollars for the first time, a day after the New York contract first crossed that milestone.
Brent jumped to a new intraday peak of 123.87 dollars before settling at a record 122.84 dollars, a gain of 52 cents.
OPEC Secretary General Abdalla Salem El-Badri said Thursday that there was no shortage of crude oil, brushing aside US calls for higher output to dampen runaway prices.
"In recent months, oil prices have become increasingly volatile, mainly driven by financial market developments and the increased flow of speculative funds into oil futures," El-Badri said in a statement.
"The turmoil in some global equity markets and the considerable depreciation in the US dollar have encouraged investors to seek better returns in commodities, particularly in the crude oil futures market. This has driven prices higher.
"There is clearly no shortage of oil in the market," he said.
The 13-member Organization of the Petroleum Exporting Countries produces about 40 percent of the world's oil, with current output at some 32 million barrels per day.
Oil prices have smashed records every day this week, and on Thursday found support in the dollar's decline against the euro after the European Central Bank left interest rates unchanged, as expected, and its president Jean-Claude Trichet warned again of the dangers of inflation.
"While the US Federal Reserve has tried to keep the wheels of the capital markets greased with lower and lower interest rates, the European Central Bank has remained resolute is guarding against inflation, and the dollar has suffered mightily, as a result, generating the steep climb in energy and food prices," said John Kilduff at MF Global.
Bank of Ireland analyst Paul Harris said: "Clearly the current spike in oil prices has been sharp and furious, and with little in the way of fresh impetus and lack of supporting (supply/demand) fundamentals a retracement must surely be on the cards."
Crude prices have also been buoyed by ongoing violence in Nigeria, Africa's largest crude oil producer, where attacks have cut production by about a quarter over the past two years.
Story from AFP
AFP 08 2009 GMT 05 08Copyright© 2008 respective author or news agency. All rights reserved.
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