Royal Dutch Shell Plc  .com Rotating Header Image

Oil hits record $122 on $200 oil prediction, supply concerns


YAHOO!FINANCE: Oil hits record $122 on $200 oil prediction, supply concerns

Tuesday May 6, 10:55 am ET
By John Wilen, AP Business Writer

Oil prices rise to record $122 a barrel on prediction of $200 oil, supply concerns

NEW YORK (AP) — Oil futures blasted to a new record of $122 a barrel Tuesday, gaining momentum as investors bought on a forecast of much higher prices and on any news hinting at supply shortages. Retail gas prices edged lower, but appear poised to rise to new records of their own in coming weeks.

A new Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years seemed to motivate much of Tuesday’s buying, although a falling dollar and increasing concerns about declining crude production in Mexico and Russia contributed, analysts say.

Light, sweet crude for June delivery jumped to a new record of $122 a barrel before retreating slightly to trade up $1.92 at $121.89 on the New York Mercantile Exchange.

Oil prices have nearly doubled from about $62 a barrel a year ago, which Goldman sees as a sign that the world is in the midst of a “super spike” in oil prices. Analyst Arjun Murti said in a research note released Monday that prices would ultimately force demand to fall sharply.

Not everyone shares Goldman’s view. Tim Evans, an analyst at Citigroup Inc., countered Goldman’s analysis with a note predicting that crude prices could as easily fall to $40 a barrel as rise to $200 over the next two years because supplies are, as Evans put it, comfortable.

James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and, said Goldman’s prediction isn’t necessarily new: “We’ve heard numbers like these out of Goldman Sachs, especially over the last 12 months.”

But there is a type of investor who responds to such predictions by buying, Cordier said.

A falling dollar on Tuesday also gave traders reason to buy. Investors often buy commodities such as oil as a hedge against inflation when the dollar falls, and a weaker greenback makes oil cheaper to investors overseas. Many analysts feel the dollar’s protracted decline is the real reason oil prices have nearly doubled since last year.

Cordier said investors are also increasingly concerned about falling oil production in Russia and Mexico, which are both major oil producers. And prices are still supported by the concerns about supply disruptions in Nigeria and northern Iraq that first drove crude past $120 a barrel on Monday. Militant attacks in Nigeria over the weekend cut some production at a Royal Dutch Shell PLC facility. In Iraq, Kurdish rebels warned they could launch suicide attacks against American interests to punish the U.S. for sharing intelligence with Turkey after Turkey bombed rebel bases in Iraq on Friday.

At the pump, meanwhile, the national average price of a gallon of regular gas slipped 0.1 cent overnight to $3.61, according to AAA and the Oil Price Information Service. Analysts are split over how high gas will go; while prices have slipped lower since May 1, leading some analysts to say gas is close to peaking, others predict the fuel will follow oil’s upward surge.

“You’re going to see new highs for gas prices, probably for the weekend,” said Cordier, who predicts an average price of $4 a gallon in the coming weeks.

In other Nymex trading Tuesday, June gasoline futures rose 5.24 cents to $3.1053 a gallon after earlier setting a new trading record of $3.1163. June heating oil futures rose 4.05 cents to $3.347 a gallon, and June natural gas futures rose 16.4 cents to $11.342 per 1,000 cubic feet.

In London, June Brent crude futures rose $2.30 to $120.29 on the ICE Futures exchange. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Oil hits record $122 on $200 oil prediction, supply concerns”

Leave a Comment

%d bloggers like this: