Leadership (Abuja)
Ese Awhotu
22 May 2008
Abuja — Crude yesterday rose above $130 a barrel for the first time on the New York Mercantile Exchange, amid concerns that the Organisation of Petroleum Exporting Countries (OPEC) will not boost output in the coming months to rein in prices, and that China will increase its oil imports in the wake of its earthquake.
As at yesterday, reports indicate that Brent crude was trading at a record $129.22.
Market Watch reports that stocks tumbled sharply, as oil near $130 a barrel fuels concerns that surging commodities prices will further crimp U.S. consumption, while an official signals the central bank may be done with cutting interest rates to boost the economy.
The report said crude ended above $129; tallies three-session gain of 4 per cent crude-oil futures travel to a new record high above $128 a barrel after Monday's record high close, as investors bet that increasing demand will exceed supply, despite increased production by Saudi Arabia.
Meanwhile, Bloomberg reported that oil prices are heading to more than $141 a barrel in the next eight years, according to futures contracts on the New York Mercantile Exchange, on concern that growth in supply may fail to keep pace with rising demand.
According to the report, oil for delivery in December 2016 surged $20.09, or 17 per cent, in the past four trading days since Goldman Sachs Group Inc., the world's biggest securities firm by market value, forecast oil would average $141 in the second half of 2008 on constraints in production and a lack of substitutes. Crude for July 2008 climbed 4.4 per cent in the same period, and today rose to a record $130.47.
The report said oil giants such as ExxonMobil Corp., Royal Dutch Shell Plc, BP Plc, Chevron Corp., Total SA and ConocoPhillips will spend a record $98.7 billion this year on exploration and production, more than quadruple the amount eight years ago. The supply companies tap from non-OPEC countries will only meet about 20 per cent of world demand growth over the next four years.
Earlier this month, UBS AG forecast that Brent crude oil, a benchmark for two-thirds of global supplies, would rise to $200 a barrel by 2015. The increase results from demand outpacing spare supply capacity sometime in 2013 to 2015, according to the May 15 report by UBS economist, Jan Stuart.
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