In Asian morning trade, the price of oil soared past 135 dollars a barrel for the first time. Dealers blame unexpected drops in US crude and gasoline stocks in a tight market.
Oil smashed past 135 dollars a barrel for the first time Thursday, continuing its astonishing rise following unexpected drops in US crude and gasoline stocks in a tight market, dealers said.
In Asian morning trade, New York's main oil futures contract, light sweet crude for July delivery, rose to a high of 135.04 dollars a barrel before easing to 134.87 dollars.
The benchmark futures contract had closed a whopping 4.10 dollars higher at a record 133.17 dollars on the New York Mercantile Exchange, and continued its upward spiral in after hours electronic trade.
London's Brent crude contract for July was also busting records, rising 1.80 dollars to 134.50 dollars, smashing its intraday high of 133.34 dollars set a day earlier.
The oil market, already boiling due to strong global demand, was further galvanized by the US Department of Energy's weekly snapshot of energy inventories, which unexpectedly showed declines.
"The oil price also benefited from further US dollar weakness," the Commonwealth Bank of Australia said in a market commentary.
The DoE report Wednesday showed US crude oil stocks fell in the week ended May 16, by 5.4 million barrels to 320.4 million barrels. Most analysts had expected a build of 300,000.
Gasoline inventories dropped by 800,000 barrels, to 209.4 million, confounding expectations of a gain of 250,000 barrels.
The news was particularly market-sensitive, coming days ahead of the US summer-holiday driving season that kicks off this weekend for the Memorial Day holiday on Monday.
Americans have already begun buying less gasoline as prices at the pump hit new highs. The change in driving habits is raising concerns about a slowdown in consumer spending, the main engine of the world's biggest economy.
The US oil inventory data "is going to put more pressure on the already record-high prices of crude oil futures," IFR analysts said in a note to clients.
The rapid surge in oil prices came as the US Federal Reserve slashed its 2008 growth forecast for the US economy, the world's biggest oil consumer.
The Fed on Wednesday slashed its forecasts to a range of 0.3 to 1.2 percent, from its prior forecast of 1.3 to 2.0 percent in January. The central bank cited higher oil prices as a key factor weighing on momentum.
Date created : 2008-05-22