Oil prices continue to climb
Photo: AFP
Oil prices skyrocket, cap biggest ever 2-day gain
Oil prices shoot up in wake of Morgan Stanley prediction, Mofaz's Iran comments
Oil prices shot up more than $11 to a new record above $139 Friday after Morgan Stanley predicted prices would hit $150 by the Fourth of July. Oil's meteoric surge, which pushed prices more than 8 percent higher in a single day, added to a huge increase Thursday to cap oil's biggest two-day gain in the history of the New York Mercantile Exchange.
Traders also zeroed in on remarks by Transportation Minister Shaul Mofaz, who was quoted as saying that an Israeli strike on Iran may be "unavoidable" if Tehran doesn't abandon its nuclear program.
Mofaz also told Yedioth Ahronoth that Iranian President Mahmoud Ahmadinejad "will disappear before Israel does," Iran is the second-biggest producer in the Organization of Petroleum Exporting Countries, and traders worry that any conflict with Israel could disrupt global supplies.
On Friday, light, sweet crude for July delivery jumped as high as $139.12 on the Nymex, before easing slightly to settle at $138.54, up $10.75. Prices hit a previous record of $135.09 a barrel on May 22, and settled Thursday at $127.79.
Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer predicted strong demand in Asia could drive prices to $150 by Independence Day (July 4,) when millions of Americans are expected to take to the roads. Slorer said shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based an oil price spike prediction on falling supplies in the Atlantic.
"We made the same call using the same parameters, but now we are starting from much lower inventory levels," Slorer said.
A further weakening of the dollar also helped send oil prices higher by enticing overseas buyers armed with stronger currencies and others looking for a hedge against the greenback. But it also represented a stampede by bullish traders and optimistic computer models betting that prices still have further to rise.
