World oil prices strike fresh record

World oil prices continued their record-breaking run Thursday, reaching a fresh intra-day peak near 124 dollars a barrel despite a larger-than-expected rise in US crude stocks.
Brent North Sea crude for June delivery was 11 cents higher at 122.43 dollars a barrel.

In London on Wednesday the contract touched an all-time peak of 122.70 dollars, before settling up 2.01 dollars at 122.32 dollars.

Oil prices have crashed through records every day this week, jumping at least seven dollars.

“Right now the market is trading by momentum as market participants tend to selectively focus on bullish news,” said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.

“Heady prices point to a significant risk of a correction,” he said.

Some economists fear that surging oil prices could crimp US economic growth, and Wall Street tumbled on Wednesday after the latest spike in oil prices.

The Dow Jones Industrial Average of blue chips closed down 1.59 percent while the technology-laden Nasdaq composite finished down 1.80 percent, in turn dragging down Asian bourses on Thursday, dealers said.

America is the world’s biggest oil importer but has been threatened by a long-running housing market slump and a related credit squeeze.

Oil prices continued their gains despite a weekly survey by the US government showing that the country’s crude stocks rose by 5.7 million barrels to 325.6 million barrels for the week ended May 2.

But Shum said that while the inventory report showed an unexpectedly large crude gain, many market participants zeroed in on draws in distillates, which include diesel and heating oil, and which provided the momentum for a strong close.

Traders said a combination of forces have pushed prices higher, including market speculators and a decision by the Organisation of the Petroleum Exporting Countries cartel not to hike output quotas.

Prices have also been buoyed by ongoing violence in Nigeria, Africa’s largest producer, traders said. Attacks have cut Nigeria’s oil production by about a quarter over the past two years.

Angst over oil prices has also been stirred by continuing diplomatic tension over Iran’s nuclear ambitions, which Tehran says are peaceful. Iran is OPEC’s second-largest producer.

“Issues with supply in Iran and Nigeria… have already been taken into account in current pricing,” said Shum.

The US investment firm Goldman Sachs forecasted on Tuesday that world oil prices could strike 200 dollars a barrel within two years.