Oil pauses near record over $145; US holiday ahead
Reuters
First Posted 10:28:00 07/04/2008
SINGAPORE -- Oil steadied above $145 a barrel on Friday as the United States heads into the Independence Day long weekend, pausing after the previous day's rally to a record near $146.
US crude oil rose 13 cents to $145.42 a barrel by 0143 GMT, off an all-time high of $145.85 hit on Thursday. The contract has risen more than 50 percent this year.
London Brent gained 22 cents to $146.30, near the record $146.69 touched a day ago.
Heightened tension between Israel and OPEC's second-biggest producer Iran has put oil prices on the boil over the last two weeks, helping crude smash records five times in the past seven sessions.
Analysts said bullish investors have rushed into crude ahead of the Fourth of July holiday, traditionally the peak US driving period, as they do not want to be caught short should the Iran-Israel row escalates.
"There weren't many changes in the situation. I think the current market is driven by speculative money, not by fundamentals," said Takeda Makoto, an analyst at Bansei Securities.
Speculation has mounted in recent weeks that Israel may be preparing a pre-emptive strike against Tehran's nuclear programme. Iran has threatened to block oil shipments through the Strait of Hormuz if it were attacked. Approximately 40 percent of the world's seaborne crude oil trade passes through that Strait.
Concerns of tight supplies, and money inflows from investors buying crude as a hedge against inflation and a weakened dollar, also lent support.
Saudi Oil Minister Ali al-Naimi reiterated his belief that the current oil rally was driven by speculators rather than any shortage of crude oil. He repeated promises that Saudi Arabia would pump more oil if there was demand for it.
Oil refiners in the United States and Asia have said official Saudi prices make it uneconomical to buy more barrels.
Venezuelan President Hugo Chavez said that a price of $100 per barrel for oil is "more than enough".
"If it were up to us, $100 per barrel would be more than enough, but it's not our fault," Chavez said during a televised address.
Crude prices have surged seven-fold since the start of 2002 as supply struggles to keep up with demand from emerging nations like China. The price spike has caused fuel protests worldwide and hurt demand in consuming nations like the United States.
On Friday, the dollar edged up against the euro and weighed on oil prices, as the greenback extended sharp gains made a day ago after US payroll data came in close to expectations and eased fears about the health of the US job market and economy.
Comments from the head of the European Central Bank that suggested further interest rate increases in Europe could be put on hold also supported the US currency.
Tropical Storm Bertha, which formed on Thursday in the eastern Atlantic Ocean, was not expected to threaten any US oil and gas production facilities in Gulf of Mexico.
Hurricane experts have predicted an above-average number of storms and hurricanes through the US hurricane season, which began on June 1 and runs through the end of November.
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