Oil prices scaled fresh record heights this week, climbing past US$127 per barrel as the market was energized by tight supplies and a weak US currency, traders said.
The price of oil soared to a record high of US$127.82 per barrel on Friday, as US President George W. Bush prepared to urge Saudi Arabia to pump more crude.
Friday’s record run for New York’s light sweet crude beat the previous all-time peak of US$126.98, which was set on Tuesday on worries about tight supplies despite an official downgrade to global oil demand growth.
London’s Brent crude contract for June spiked to its own historic peak of US$126.34 on Friday, beating the record of US$125.90 reached on May 9.
Oil prices have risen by more than a quarter since the start of the year, when they surged past US$100 a barrel for the first time.
Bush arrived in Saudi Arabia from Israel on Friday for talks with the world’s biggest crude exporter on record oil prices that have hit Western consumers hard.
“The global oil market remains indeed structurally tight,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore. “Even though demand growth is showing some weakness, supply growth is also not there. OPEC continues to restrain supply and production in non-OPEC states are not expected to be strong.”
Saudi Arabia is the main player in the 13-nation organization, which pumps 40 percent of the world’s oil.
On Thursday, OPEC trimmed its estimate of world oil demand growth for this year, citing higher prices and slower economic momentum in major industrialized countries including the US.
Global oil demand was projected to grow by 1.35 percent this year, compared with a previous estimate of 1.4 percent, OPEC said in a monthly survey.
The oil market was also supported by strong demand from China and a weak US currency.
On Tuesday, the International Energy Agency (IEA) suggested growth in global oil demand would slow this year.
The IEA, an energy policy adviser to major industrialized countries, predicted that crude demand this year would stand at 86.8 million barrels per day — about 390,000 bpd less than its previous estimate given last month.
By Friday, New York’s main oil futures contract, light sweet crude for delivery in June, had jumped to US$127.43 from US$124.80 a week earlier. Brent North Sea crude for June was at US$126.07, from US$124.39 the previous week.