SINGAPORE, Sept 18 Oil surged to a record high above $ 81 a barrel on Tuesday, drawing st

Written by:
Subscribe to Oneindia News

SINGAPORE, Sept 18 (Reuters) Oil surged to a record high above $81 a barrel on Tuesday, drawing strength from concerns of a winter supply squeeze in the world's top consumer where an anticipated interest rate cut is calming recession fears.

U.S. light crude for October delivery rose 56 cents to $81.13 a barrel by 0315 GMT after touching a high of $81.18 earlier in Tuesday's session and a $1.47 jump on Monday. London Brent crude for November rose 22 cents to $77.20 a barrel.

''The market developed a momentum of its own when price movement coincided with tightness in the market,'' said David Moore, commodities strategist Australia's Commonwealth Bank.

''In such a tight market there is potential for it to go up quite sharply without any major new news, but I actually expect some profit-taking at these levels to around $80,'' he added.

The U.S. Federal Reserve looked set to trim rates by at least 25 basis points on Tuesday to keep a credit crunch from pulling the economy into a recession, which analysts have feared could hamper oil demand.

Hurricane and other supply risks, together with falling U.S.

inventories and fund flows into energy from poorly performing equity markets, have fuelled the recent hike in oil prices, which have climbed 33 percent this year.

Goldman Sachs on Monday forecast U.S. oil prices would surge to $85 a barrel by the end of the year, up $13 from its previous forecast, and said crude could climb as high as $90 due to tight supplies.

Goldman Sachs called last week's decision by the Organization of Petroleum Exporting Countries to raise output by 500,000 barrels per day from Nov. 1 ''too little, too late''.

U.S. crude oil supplies probably dropped for the fourth week in a row last week as imports shrank further, industry analysts polled by Reuters ahead of Wednesday's government data said.

Forecasts called for a 2 million barrel draw in crude stocks, a 500,000 barrel decline in gasoline stocks and a 1.2 million barrel build in distillates, which includes heating oil, ahead of peak winter heating demand in the northern hemisphere.

Though oil prices have quadrupled since 2002, when adjusted for inflation the price is below the $90-a-barrel peaks of the Iranian Revolution in 1979.


Please Wait while comments are loading...