Wednesday May 7, 06:04 PM
Oil price hits record high 122.81 dollars
LONDON (AFP) - The price of oil struck a record high 122.81 dollars on Wednesday amid concerns over tight supplies, traders said.
New York crude reached the new high -- beating Tuesday's record of 122.73 dollars -- despite news that US energy (NASDAQ: USEG - news) stockpiles had risen by a bigger than expected amount last week.
In London, Brent crude also hit an all-time peak of 121.47 dollars, beating Tuesday's record of 120.99 dollars.
Runaway oil prices have almost doubled in the past year and have jumped by more than 20 dollars since the beginning of 2008.
Goldman Sachs (NYSE: GS - news) on Tuesday forecast that prices could strike 200 dollars a barrel within two years. The US investment bank famously and correctly predicted three years ago that oil would break through 100 dollars -- which it did in January.
After striking new highs, oil prices pulled back but remained above Tuesday's closing levels.
New York's main oil futures contract, light sweet crude for June delivery, stood at 121.88 dollars, up four cents on the day.
Brent North Sea crude for June delivery was at 120.71 dollars, up 38 cents.
Ongoing violence in Nigeria -- Africa's largest crude producer -- had helped push oil prices to record peaks on Tuesday, traders said.
"Support stemmed from continued unrest in Nigeria where a string of attacks by rebels calling for a greater share of the country's oil wealth have shut-in a sizeable element of its production," said analysts at energy consultancy John Hall Associates.
"Concerns over further Turkish incursions into Iraq in pursuit of Kurdish separatists also underpinned price movements."
Nigerian militants attacked an oil ship off the coast of the west African country and took two people hostage over the weekend.
The incident on Saturday came after an attack on Shell (LSE: RDSB.L - news) oil wells and a flow station in southern Bayelsa state, leading to a cut in the company's output.
Such attacks have cut Nigeria's production by about a quarter over the past two years.
David Moore, a commodity strategist at the Commonwealth Bank of Australia (Munich: 882695 - news) in Sydney, said sentiment remained buoyant after Tuesday's sharp gains.
"While issues on the supply side are being progressively resolved ... they highlight the risks (to) oil production going forward," said Moore.
He added that "Iran may also add a little risk element" in the near term.
Iran said Monday it would reject any offer that violates its right to the full nuclear fuel cycle after world powers said they had prepared a new package to end a long-running standoff over its nuclear programme.
Oil players fear the ongoing tension could result in Iran using oil as a bargaining chip. Iran is the second-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC) cartel.
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