Crude oil shoots past US$135/bbl

Oil prices blazed past the US$135 per barrel mark after a US government report showed a surprising drop in fuel inventories, escalating worries over already fragile global supply scenario. A weak dollar also continued to attract heavy fund buying. To make matters worse, OPEC once again refused to increase supply. OPEC Secretary General Abdullah al-Badri said oil prices could keep rising if factors such as the weakening dollar continue to put pressure on prices. But, he added that OPEC would only act when market fundamentals showed a need to do so.

Billionaire investor T. Boone Pickens said he expects oil to hit US$150 a barrel this year. His comments came after at least five banks raised price forecasts in the past week on expectations that supply constraints will persist. Two weeks back, Goldman Sachs said crude oil could touch US$200 by 2010. The International Energy Agency (IEA) said it may cut long-term supply forecasts as fields deplete faster than expected. However, oil prices fell on the last day of the week as traders sold to benefit from a 20% increase in prices since May 1.

Crude oil for July delivery rose as much as US$1.57, or 1.2%, to US$132.38 a barrel in New York. It was at US$132.08 a barrel at 10:41 a.m. in London, on Friday. Yesterday, oil fell US$2.36, or 1.8%, to settle at US$130.81 after reaching US$135.09 a barrel, the highest on record. Oil prices are up 4.3% so far this week and have doubled in the last one year. Crude prices are likely to carry on rising, futures prices showed. The December 2016 contract is up 7.9% this week