Oil Soars to Historic High Past 135 dollars

The price of oil surged to a record high above 135 dollars on Thursday, pursuing its dramatic upwards spiral on deep worries about tight supplies and rising demand, analysts said.

New York's light sweet crude struck an all-time peak of 135.04 dollars a barrel and Brent scored a historic height of 134.51 dollars.

"As we have been reminded these last couple of sessions, markets move as much on psychology, namely fear and greed, as on fundamentals -- supply and demand," said the latest daily Schork Report on energy markets published Thursday.

Crude futures have risen by more than a third since the beginning of 2008 when they struck 100 dollars for the first time, lifted by a unrest in oil-producing countries, OPEC's unwillingness to hike output, high Asian demand for energy and a weak dollar.

Prices breached 130 dollars for the first time on Wednesday and continued higher on news that US energy inventories had unexpectedly fallen last week.

After striking a new high point on Thursday, New York's main oil futures contract, light sweet crude for July delivery, stood at 134.53 dollars, up 1.36 dollars on Wednesday's close.

London's Brent crude contract for July jumped 1.58 dollars to 134.28 dollars a barrel on slight profit-taking.

Analysts noted that a need for diesel-fueled power generation in earthquake-affected areas of China was boosting demand for the fuel.

On the supply side, OPEC head Abdalla Salem El-Badri has voiced concern about volatility in the oil market.

"The secretary general expressed concern about the volatility that has characterized the market in recent times," the Vienna-based cartel said in a statement from Caracas, where El-Badri met Venezuelan President Hugo Chavez as part of a week-long working visit to OPEC members Venezuela and Ecuador.

"OPEC will continue to strive to bring stability to the oil market," the statement said.

OPEC has insisted that the market is well supplied and that record prices reflect speculative investment activity rather than underlying supply and demand conditions.

Source: AFP

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