Oil prices top record US$142 in New York trade
Posted: 28 June 2008 0447 hrs

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NEW YORK : Oil prices briefly struck fresh record highs over 142 dollars on Friday as the US dollar remained weak, and as world stock markets tumbled amid economic jitters marking the end of a volatile week.

The jump in oil prices, which have doubled in the past year, has triggered inflation fears and worries in the United States that already lackluster economic growth could be crimped further.

New York's main oil futures contract, light sweet crude for August delivery, closed up 57 cents at 140.21 dollars a barrel, marking a record finish.

The contract had earlier struck an all-time intraday price peak of 142.99 dollars.

The picture was similar on the other side of the Atlantic as a key London contract, Brent North Sea crude for August delivery, rose 48 cents to settle at an all-time closing peak of 140.31 dollars.

Brent had earlier streaked to a record 142.97 dollars in frenzied intraday trading.

"Crude oil futures made fresh record highs, with higher oil prices fuelling inflationary fears and thus hurting stock markets, which in turn triggered a further rally in commodities as investors seek better returns," Sucden analyst Michael Davies said.

The ailing dollar has fueled demand for oil, which is priced in dollars, from traders holding stronger currencies.

Prices "continued to be buoyed by the dollar as the greenback continues its free fall descent this week," Davies said.

OPEC's president predicted Thursday that already red hot oil prices could reach 170 dollars this year because of the weak dollar and geopolitical unrest.

Crude futures crossed 140 dollars for the first time on Thursday following the price forecast made by OPEC's president, Algerian Energy Minister Chakib Khelil, in an interview with the France 24 news channel.

Consumers have blamed the months-long surge in oil prices on insufficient output from the Organization of the Petroleum Exporting Countries.

OPEC, which produces 40 percent of the world's oil, argues that speculators are responsible for pushing up prices while analysts say that tensions in oil-producing countries, such as Iran, Iraq and Nigeria, have also stocked prices.

In a volatile trading week, prices had closed down 3.50 dollars on Wednesday after a government survey revealed an unexpected rise in stockpiles in the United States, the world's biggest energy consumer.

The US Department of Energy said crude stockpiles had risen for the first time in six weeks, by 800,000 barrels, in the week to June 20. Analysts had expected a drop of 1.1 million barrels.

Oil prices had rallied at the start of the week after major energy producers ruled out significant output increases.

Saudi Arabia did announce an increase of 200,000 barrels per day at a summit between producers and consumers in the Saudi city of Jeddah last week, but this had been previously announced and so failed to help the market much.

Prices also shot higher on Monday after militants blew up a pipeline in Nigeria over the weekend, cutting output by 120,000 barrels per day, adding to concerns about the country's exports.

Anglo-Dutch oil company Shell had earlier said it could not promise to deliver 225,000 barrels per day for June and July following an unprecedented raid on its offshore Bonga oilfield.

Unrest in the Niger Delta has cut total oil production in one of Africa's biggest producers by a quarter over the past two years.

- AFP /ls