LONDON, 7 May 2008 — Oil prices spiked to a record high $122.49 here yesterday as the market was driven by concerns over violence in key producer Nigeria and the weak US currency, analysts said.
After hitting the fresh high, New York’s main oil futures contract, light sweet crude for June delivery, pulled back slightly to stand at $122.35 per barrel, still up $2.34 from Monday’s close.
London’s Brent North Sea crude for June also reached an all-time high at $120.96, before slipping back to $120.59 for a gain of $2.46. Runaway oil prices have almost doubled in the past year and have surged by more than $20 since the start of 2008.
The latest record price levels beat the previous all-time highs that were set earlier yesterday.
“Market headlines are dominated by the impact of currency fluctuations, geopolitics in the form of actual and potential threats to supply in Nigeria, Iraq and Iran, plus better-than-expected recent US economic data,” said Barclays Capital analyst Kevin Norrish.
“Of these three drivers, we think it is supply losses that are the key driver at present.”
Nigeria, Africa’s largest oil producer, has seen an upsurge in violent attacks on its oil industry in the past two years.
Events surrounding Iran, the world’s fourth biggest oil producer, gave added support to prices yesterday. Record-breaking oil prices have sparked widespread international concern among consumer nations.
Kuwaiti Oil Minister Mohammad Al-Olaim last week said that OPEC may hold an extraordinary meeting on oil prices before a scheduled conference in September and did not appear to rule out higher production.
However, Libya’s acting Oil Minister Chukri Ghanem recently indicated that the Organization of Petroleum Exporting Countries could not pump more crude.
Yesterday, the Indonesian government said it was considering withdrawing from OPEC, which produces about 40 percent of the world’s oil. Indonesia is the only Southeast Asian member of the oil organization but declining production levels have turned it into a net importer.
Meanwhile, the dollar fell back sharply against the euro yesterday ahead of key interest rate calls by the European Central Bank and its British counterpart later in the week, dealers said.
At the same time, profit-taking on the dollar’s recent gains helped push the US unit down again, undercutting recent more positive sentiment on the US economic outlook.
In late European trade, the euro was at 1.5553 dollars, up sharply from 1.5492 in New York late on Monday. The dollar slipped to 104.50 yen from 104.86 yen.