Oil surges above $120 a barrel
06 May 2008 06:36 GMT
|Threats to oil supplies, weak dollar and rising global demand lead to bullish outlook.|
| Crude oil prices surged above $120 a barrel in Asia amid concerns over a weakening US dollar and supply disruptions in Nigeria.|
Light sweet crude for June delivery rose 20 cents to $120.17 a barrel in electronic trading on the New York Mercantile Exchange by 05:02 GMT Tuesday. The contract had surged to a trading record of US$120.36 a barrel overnight before settling at US$119.97 a barrel, up US$3.65 from the close of trading on Friday.
Threats to supply have emerged from African oil-producing nation, Nigeria, Iraq and Iran, following escalating tensions with the West. Events in all three nations have caused prices to spike on a number of occations in recent months.
In Nigeria, a Royal Dutch Shell PLC spokesman said an oil facility in southern Nigeria had been attacked and some oil production had been shut down. In Iraq, Kurdish rebels warned they could launch suicide attacks against American interests to punish the U.S. for sharing intelligence with Turkey after rebel bases were bombed in Iraq on Friday. And Iran's Supreme Leader Ayatollah Ali Khamenei said his country will not bend to international pressure and give up its nuclear program.
Also influencing the bullish market outlook is the fact that the U.S is entering the summer driving season in three to four weeks. The peak-consumption period typically lasts from the Memorial Day weekend in late May to Labor Day in early September.
Meanwhile, China is increasing refining capacity and boosting oil imports to meet rising demand for the Olympic Games. While demand for oil and gasoline has dropped in the U.S. global demand for oil has continued to increase with China accounting for approximately one third of last year's growth in global oil demand.