Oil Steady In Asian Trade
Friday, July 4, 2008 at 10:49 am Under Business News
SINGAPORE:World oil prices held steady near record highs on Friday, driven by supply worries and a weak dollar, analysts said.
New York’s main oil futures contract, light sweet crude for August delivery, gained seven cents to 145.36 dollars a barrel from its record close of 145.29 dollars on Thursday at the New York Mercantile Exchange.
The contract reached an intra-day record of 145.85 on Thursday.
Brent North Sea crude for August delivery rose 12 cents to 146.20 dollars from its record close of 146.08 on Thursday in London. The contract hit an intra-day record of 146.69 in earlier trading.
Oil has broken a series of price records this week, continuing the momentum begun at the start of the year when it pushed through 100 dollars for the first time.
“I think the uptrend is intact and supply-side concerns will really drive pricing in the coming weeks,” said Victor Shum, of Purvin and Gertz international energy consultancy in Singapore.
The surge has triggered fears over inflation and slower economic growth, while sparking protests around the world.
Divisions between consumer and producer countries over who to blame appeared to sharpen at the World Petroleum Congress, which brought together political and corporate oil bosses in Madrid.
Saudi Arabia, Opec’s leading exporter, expressed concern on Thursday about new records for benchmark crude and again said it was committed to dialogue between consumers and producers.
But those discussions show no sign of finding a solution to market tensions. Both sides cite different reasons: consumers underline supply shortage fears, while producers blame financial speculators and a falling US dollar.
Shum said that, along with a weaker greenback, oil prices have found strength in a flow of investor funds into commodities from poorly-performing global equities markets.
The struggling US currency makes dollar-priced commodities like oil cheaper for foreign buyers with stronger currencies.
Shum said a spike to 150 dollars a barrel was possible, though not immediately, while the chief executive of Russian energy giant Gazprom forecast that prices would “very soon” hit 250 dollars a barrel.
Shum said prices will not rise indefinitely because there will eventually be a negative impact on demand. While there is evidence of slowing demand in the United States, data from China and other developing markets will not be clear for several more months, he said.
“Globally we still have demand growing at a reasonable pace,” Shum said.
Analysts say one of the reasons for higher oil prices is that production is failing to catch up with growing global demand.
They say concerns over supply in Iran, the world’s fourth biggest crude producer, has been another factor holding up prices.
Speculation has mounted that Israel might be planning a military strike against Iran’s nuclear sites.
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