Oil prices rally back towards record highs

LONDON: Crude oil prices jumped higher on Friday to trade just below $132 a barrel, $3 away from record highs reached this week on concerns that supplies will not meet demand, traders said.New York s main oil futures contract, light sweet crude for July delivery, rose $1.12 to $131.93 a barrel.In London, Brent North Sea crude for July delivery grew $1.42, also to $131.93 a barrel.On Thursday, Brent struck an all-time high of $135.14 and New York crude reached a record $135.09, before both contracts slid as investors banked profits. While we do expect this bubble to burst, and make no mistake about it this bubble will burst, we are not ready to say yesterday s profit-taking selloff was the start of the correction, said the latest daily Schork Report on energy markets published on Friday.Oil prices have risen more than fourfold in five years, when the New York benchmark, underpinned by Chinese demand for crude.They reached $100 for the first time in January, crossed $120 a barrel at the start of May, and $130 on Wednesday after government data showed US energy inventories surprisingly fell last week.Oil prices are also being supported by unrest in oil-producing countries, OPEC s unwillingness to hike output, and a weak dollar which makes commodities priced in the US unit cheaper for foreign buyers. With the surge in oil prices starting to look increasingly like a speculative mania, further increases are likely in the short term as more and more speculative capital is sucked into the vortex created by rising prices, said Shane Oliver, chief economist of AMP Capital Investors in Sydney.Oil at $150 a barrel is now just a few weeks trading away, he said.With supply struggling to meet demand, oil at $300 per barrel is not inconceivable on a five-year horizon, Oliver added on Friday.Algeria s energy minister and OPEC president, Chakib Khelil, said Thursday that falling production in non-OPEC countries such as Russia has contributed to the spectacular rise in global oil prices.Meanwhile Abdala El-Badri, the secretary general of the Organization of the Petroleum Exporting Countries, said cartel members were unhappy with surging prices he blamed on speculators and a weak US dollar.OPEC, which produces 40 percent of the world s oil, is reluctant to bend to US-led demands for it to pump more crude to help cool rocketing prices.The 13-nation cartel insists that the market is well supplied and that record prices reflect speculative investment activity rather than actual supply and demand conditions. -AFP