NEW YORK: Oil prices have shot up more than $11 to a new record above
$139 after Morgan Stanley predicted prices would hit $150 by the
fourth of July.
Oil's meteoric surge, which pushed prices more than 8 percent higher
in a single day, added to a huge increase on Thursday to cap oil's
biggest two-day gain in the history of the New York Mercantile
Exchange. The burst higher -- which also came on rising Middle East
tensions -- also raised the prospect of accelerating inflation by
adding to already strained transportation costs.
That gloomy outlook sent stocks tumbling, taking the Dow Jones
industrials nearly 400 points.
Light, sweet crude for July delivery jumped as high as $139.12 on the
Nymex, before easing slightly to settle at $138.54, up $10.75. Prices
hit a previous record of $135.09 a barrel on May 22, and settled
Thursday at $127.79.
Brent crude on the ICE futures exchange settled $10.15 higher at a
record $137.69 a barrel, after hitting an all-time high of $138.12 a
barrel.
Prices pushed sharply higher yesterday after Morgan Stanley analyst
Ole Slorer predicted strong demand in Asia could drive prices to $150
by Independence Day (July 4), when millions of Americans are expected
to take to the roads. Slorer said shipments from the Middle East are
mimicking patterns seen in the third quarter last year, when Morgan
Stanley based an oil price spike prediction on falling supplies in the
Atlantic.
Traders also zeroed in on remarks by an Israeli Cabinet minister, who
was quoted as saying his country will attack Iran if it doesn't
abandon its nuclear programme. Transportation Minister Shaul Mofaz
added that Iranian President Mahmoud Ahmadinejad "will disappear
before Israel does," the Yediot Ahronot daily reported
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