Friday May 9, 03:24 PM
Oil price over $126 a barrel for first time UPDATE
(updating with further detail)
LONDON (Thomson Financial) - The price of New York crude oil struck a record high of $126 on Friday, lifted by speculative demand amid concerns about tight global energy supplies, analysts said. New York's main oil futures contract, light sweet crude for June delivery, spiked as high as $126.20 in mid-afternoon London trading hours.
London's Brent crude contract hit an all-time high of $125.90.
Sucden analyst Michael Davies said there was 'keen interest in the oil market by the (investment) funds, which are currently being attracted by oil's rapid price appreciation this year.
'This probably explains the move higher over the last few days,' he told Agence France-Presse.
Prices have rocketed to fresh records every day this week on the back of unrest in key producer Nigeria and other ongoing supply worries.
Oil has soared 25 percent since the start of 2008 and has doubled since the same stage last year -- when it stood at about $62.
Prices continued higher on Thursday after the OPEC cartel insisted the market was well-supplied and driven by speculators, not underlying demand.
OPEC Secretary General Abdalla Salem El-Badri said Thursday there was no shortage of crude, brushing aside US calls for higher output to dampen runaway prices.
'There is clearly no shortage of oil in the market,' El-Badri said in a statement.
El-Badri also maintained OPEC's stance that oil-market volatility has been driven by financial market developments and the increased flow of speculative funds into oil futures
However, analyst Kevin Norrish at Barclays Capital argued that the recent strengthening of the dollar did not support El-Badri's argument.
'Given that the US dollar has marginally strengthened against the euro over the past week, while (New York crude) prices have risen by 9.0 percent to reach all-time high prices, there appears to be little evidence to support his comment,' Norrish said.
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