Crude prices rose more than one US dollar on Tuesday setting a
new record close above 78 dollars a barrel on demand concerns.
Light, sweet crude for September delivery rose 1.38 dollars to
78.21 dollars a barrel on the New York Mercantile Exchange after
rising as high as 78.28 dollars during the session.
The former highest-ever settlement price for a front-month
contract was 77.03 dollars a barrel, set on July 14, 2006. The
previous intraday record was seen in mid-July of last year at 77.95
dollars, though the electronic trading recording high stands at
78.40 dollars.
Supply demand imbalance
Crude prices have risen more than 20 percent in the past two
months on a combination of refinery outages, supply reductions in
Africa and the North Sea and forecasts that global supply at the
end of the year might not be enough to match demand.
"The rise in the price of oil is very much reflective of the
supply demand imbalance that currently exists in the market," said
Conley Turner, senior research analyst at Wall Street
Strategies.
"Almost every major producer is saying that despite an increase
in exploration activity, they are just not finding enough new
reserves to mitigate the pace at which current supplies are being
used up," he added.
"It a very much a foregone conclusion that oil will hit 80
dollars per barrel over the next several weeks and approach 100
dollars per barrel by the next year's first quarter," Conley Turner
anticipated.
On Wednesday, the US Energy Information Administration is due to
the US refinery utilization increased last week, according to a Dow
Jones Newswires survey of energy analysts.
Rise to world market price
On London ICE futures exchange, Brent crude for September
delivery rose 1.34 dollars to 77.08 dollars a barrel.
Since last week, crude futures were traded higher on the New
York market compared with Brent crude, which hit a record high of
78.64 dollars per barrel last year.
"I do not believe that the US sweet crude (WTI) is high," said
John Powell, an independent option market maker at American Stock
Exchange. "Rather it has risen from its depressed level to a world
market price."
"Historically Brent is priced below WTI. Due to refinery
problems, which created high inventories, WTI was depressed," he
added.
"WTI was trading well below Brent. When Brent was over 80
dollars per barrel, WTI was trading at 72 dollars per barrel. Brent
has recently dropped in price. WTI has increased to world prices as
it is now above Brent," pointed out John Powell.
(Xinhua News Agency August 1, 2007)
