Thursday May 8, 12:45 PM
Oil fluctuates near $123/bbl; Brent hits new record in London
LONDON (Thomson Financial) - Oil prices fluctuated near $123 a barrel on Thursday, dipping in and out of negative territory with Brent in London briefly rising to touch a new all-time high.
At 12:24 p.m., New York-traded West Texas
Intermediate crude for June delivery was down 33 cents to $123.20 a barrel, having yesterday hit a record high of $123.93 a barrel.
In London, Brent crude for June delivery was down 29 cents to $122.03 a barrel having earlier touched an all-time record of $122.79.
Price direction has been uncertain on Thursday, following a record breaking run which has seen the benchmark New York contract set new records over each of the last three sessions.
While analysts have pointed to long-term fears that rising demand for oil could eventually outstrip supplies to explain crude's most recent rally, as well as short-term concerns over Nigerian supply outages and tight global markets for diesel and heating oil, a firmer tone in the U.S. dollar has capped gains in commodities priced in the greenback as they become relatively more expensive for holders of other currencies.
'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 fundamentals a retracement must surely be on the cards,' said Bank of Ireland (Dublin: BIR.IR - news) analyst Paul Harris (PAUHQ.PK - news) . 'That said, in current conditions it is difficult to call exactly when the bearish elements will prevail. More importantly, the key issue is how far that pullback will be, with oil prices below $100 a barrel at this stage a dim and distant memory,' he added.
Wednesday's weekly report of U.S. fuel stocks figures provided the spur for yesterday's price jump, with distillate stocks declining by 100,000 barrels against market expectations for a 1.3-million-barrel gain.
However, crude and gasoline inventories rose by more than expected, with a massive 5.7-million-barrel rise in crude stockpiles trumping market estimates for just a 2-million-barrel build, weighing on prices.
Gasoline inventories rose by 800,000 barrels, against market expectations for a fall of 200,000 barrels.
Goldman Sachs (NYSE: GS - news) ' prediction this week for oil prices to reach between $150 and $200 over the next two years has fanned the flames under crude's rise into uncharted territory. The call came from analyst Arjun Murti, who three years ago correctly predicted oil's rise above the $100 mark when prices were almost half that price.
Rapid demand growth in developing countries like China and India has raised fears global oil production may struggle to keep up, leading to a potential short-fall of supplies.
Robin Batchelor, fund manager of BlackRock (NYSE: BLK - news) 's World Energy Fund, said yesterday that oil prices are likely to remain high well into the next decade.
'If China and India were to increase their consumption per person to current U.S. levels, these two countries alone would require 160 million barrels per day, more than twice the world's supply of oil today,' Batchelor said, adding that high oil prices were also contributing to 'resource nationalism' as oil producing countries demand a bigger share of the industry's profits, curbing access for the major oil companies and reducing investment incentives.
|
Send Article by Email
