Oil prices escalate to a new record US$146

04-Jul-08

The world oil prices mount to a record US$146 a barrel on Thursday. The traders attribute this rise to the factors like falling US oil reserves, geopolitical tensions and a weakening dollar. Oil prices, which have doubled in value over the past year, were driven higher by news earlier this week that American crude stockpiles fell by 2.0 million barrels to stand at 299.8 mln barrels in the week ended June 27. This was the first time inventory fell below the psychologically critical 300 mln barrel threshold since January. Analysts say one of the reasons for higher oil prices is that production is failing to catch up with growing global demand. The weakening US currency has also aided demand of dollar-priced commodities like oil for foreign buyers. In London, Brent North Sea oil for August delivery surged to an all-time peak of US$146.69 and the contract subsequently settled up 1.82 dollars at US$146.08. New York's main oil futures contract, light sweet crude for August delivery, rose to an all-time high of US$145.85 before a record close at US$145.29, marking a gain of 1.72 dollars from a day earlier. According to a Capital analyst, the all-time high prices are aided by decline in the US crude oil inventories. The US government's Energy Information Administration (EIA) had also revealed on Wednesday that crude inventories were 15.3% lower than at the same period a year ago. Besides, the record-breaking price surge came after the speculations surrounding a planned military attack on Iran - one of the key oil exporters. According to one of the senior officials of OPEC, it would be difficult to replace the crude output of Iran (4.2 mln barrels a day) should the country face an attack. Gazprom - the Russian energy giant-meanwhile forecast that soaring oil prices would soon hit US$250 a barrel.