Oil price strikes record 126.98 dollars
NEW YORK (AFP) — The price of crude oil struck a record high of 126.98 dollars a barrel Tuesday in New York despite new predictions of slower demand growth for energy, traders said.
Crude traded in New York briefly broke through its prior peak of 126.40 dollars, which was reached on Monday. The latest spike came after prices had fallen earlier Tuesday after the International Energy Agency (IEA) cut its forecast for growth in global oil demand.
After scaling new heights, New York's main oil futures contract, light sweet crude for June delivery, closed at 125.80 dollars, up 1.57 dollars from Monday's close.
In London, the Brent crude contract for June delivery settled up 1.19 dollars at 124.10 dollars.
"What we've seen in this market since August is that any dip is eventually met by a short-covering rally that pushes prices to new highs," said AG Edwards analyst Eric Wittenauer.
"It is not a surprise to see prices struggle to show any kind of downward trend," he said.
The Paris-based IEA forecast in a monthly report that crude oil demand in 2008 would stand at 86.8 million barrels per day (bpd) --- some 390,000 bpd less than a previous estimate given in April.
The energy monitoring agency also said it now estimated world oil demand in 2007 at 85.8 million bpd.
"The IEA has revised its demand forecast further to a growth of only one million bpd for 2008 and warned that further downward revisions could be on the way," said Petromatrix analyst Olivier Jakob.
"At the start of the year, the IEA was forecasting demand growth of 2.1 million bpd which makes for global demand projections cut in half since the year started," he said.
Yet prices continued to surge Tuesday. Along with an inflow of investor funds, analysts have cited a variety of factors for this year's price spikes, including rising energy demand from Asian powerhouse economies China and India, and OPEC's refusal to pump more crude.
"Oil prices have simply risen too far and too fast over a short period of time with really no reasons driving the rally other than investor and technical interest," said Victor Shum, an analyst at the Purvin and Gertz energy consultancy in Singapore.
Prices were also moving in line with changes in the dollar but traders said that connection has weakened in recent weeks.
The US currency fell to a record low against the euro in April but has regained ground since then.
A weaker US currency makes dollar-priced crude more affordable for holders of stronger currencies.
Analysts said the market was also looking overbought as threatened disruptions to Middle East supply have failed to materialize and as militant threats against oil company operations in Nigeria have been priced in to current values.
