Oil galloped to a high above US$135 a barrel yesterday, extending this month’s near 20 per cent rally after a sharp drop in US crude stocks and the weakening greenback triggered buying by investors.
The climb in prices, which have marked new record highs in 10 of the last 14 sessions, has set off alarm bells around the world, although the Organisation of Petroleum Exporting Countries has maintained that the market remains well supplied with crude and that prices are beyond its control.
The US July crude contract extended Wednesday’s more than US$4 surge to reach a high of US$135.04 early yesterday. By 0729 GMT (3.29pm Singapore time), it was trading up US$1.17 at US$134.34 a barrel.
US crude stocks fell 5.4 million barrels to 320.4 million barrels last week, counter to expectations of a small rise in inventories, intensifying concerns about supplies at the world’s biggest consumer just ahead of the start of summer.
Several analysts said the latest step higher in prices had come after companies or traders who sold the market short scrambled to buy back their positions.
Recent bearishness towards the US dollar added momentum to the oil market. The greenback was pinned at one-month lows against the euro after the Federal Reserve cut its growth forecasts for this year.
