Oil Rises 135 Dollars For Barrel in Asian Trade

Large institutional investors continued to pile money into oil, which is giving better returns than investments in stocks and bonds, further heating up prices, they said.

The Commonwealth Bank of Australia said in a market commentary that the "oil price also benefited from further US dollar weakness."

New York's main oil futures contract, light sweet crude for July delivery, briefly rose to a high of 135.04 dollars a barrel before easing to 134.59 dollars in Asian afternoon trade, up 1.42 dollars from its US close.

The benchmark futures contract had closed a whopping 4.10 dollars higher at a record 133.17 dollars on the New York Mercantile Exchange, and continued its upward spiral in after-hours electronic trade.

London's Brent crude contract for July was also busting records, rising to a high of 134.50 before pulling back to trade at 134.36 dollars, smashing its intraday peak of 133.34 dollars set a day earlier.

In unadjusted terms, New York oil has risen more than fourfold compared with five years ago when it was trading at just below 30 dollars a barrel.

"Currently, market psychology is trumping fundamentals," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

"The psychology is that the oil market is tight. Even though there is no shortage, global oil demand continues to grow and supply growth is restrained," he added.

Source: By DDNEWS

Editor: I think we better get used these higher oil prices and adujust our way of life. I don't see the oil price coming down. Even if we cut back dramatically, the demand for oil rises in China and India. When African economy picks up the demand for oil will be even more. Perhaps these things will push the innovators and the public to think of turning our economy to run on a renewable fuel rather than something that is depended on limits and the will of OPEC.