Crude oil rocketed to a record high of almost US$140 a barrel yesterday despite news that Saudi Arabia was ready to raise output to help cool soaring energy costs threatening economic growth.
New York main oil futures contract, light sweet crude for delivery next month reached US$139.89, beating its all-time high of US$139.12 recorded on June 6.
New York’s main contract later pulled back to stand at US$137.73, which was a gain of US$2.87 compared with Friday’s closing level.
“The current proposed [production] increase is set to lift Saudi’s output to 9.7 million barrels per day in July, the highest monthly rate since August 1981, as reported by United Nations chief Ban Ki-moon over the weekend,” said Kevin Norrish, an oil analyst at Barclays Capital.
“However, in our view, the move does not seem to be enough to reverse the recent strength in prices, as it does little to repeal the longer-term expectations for tight demand-supply balances,” he said.
Traders said yesterday that oil prices were winning support from a weaker dollar, which helps lift demand for commodities priced in the US unit as they become cheaper for foreign buyers.
The market was also digesting news of a partial halt to oil production in Norway — the world’s fifth biggest exporter of crude — after a fire struck a North Sea platform on Sunday.
Brent North Sea crude for August delivery struck a record high of US$139.32 yesterday. Later, in late afternoon London trade, Brent was at US$137.56, up US$2.45.
UN Secretary-General Ban has said Saudi Arabian Oil Minister Ali al-Nuaimi plans to raise his kingdom’s production by 200,000 barrels a day next month on top of an increase of 300,000 barrels made this month.
“They will respond positively whenever there is a request from their customers, so there is no shortage,” Ban said of Saudi Arabia following a weekend visit to the oil rich kingdom.
He added that “they don’t want to be blamed” for high oil prices.
An official Saudi announcement could be made at a weekend summit of heads of state, oil ministers and business leaders to discuss oil price concerns. The summit on Sunday will be hosted by Saudi Arabia in Jeddah.
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