Oil slips 0.5pct after record US$11 surge to new high

Source: Agencies  |   2008-6-9  |     ONLINE EDITION

OIL edged lower today after its biggest surge ever, as OPEC's resistance to pumping more crude kept prices near their record high from Friday, when the falling dollar and Middle East jitters fuelled an unprecedented US$11 jump.

US light, sweet crude for July delivery fell as much as US$1.42, or over 1 percent, to US$137.12 a barrel in opening trade, but stood at US$137.79 by 2319 GMT, down 75 cents.

The contract surged US$10.75 or 8.4 percent on Friday, hitting a new record of US$139.12 a barrel amid a buying frenzy triggered by the slumping dollar and comments by an Israeli minister about a possible attack on Iran, the world's fourth-largest producer.

A forecast by investment bank Morgan Stanley that oil prices could top US$150 a barrel by the July 4 US holiday added to Friday's speculative fever, taking two-day gains to more than US$16 a barrel and reversing two weeks of losses.

Oil's six-year-long rally has gathered pace this year, with prices rising about 40 percent since January as funds hedge against the dollar and some bet that long-term oil supplies will struggle to keep up with demand in the decades ahead.

"What's driving this ultimately is compound consumption. You can't put 40 million cars a year on the road and think we're going to consume less," said Greg Smith, who manages US$500 million in futures as the head of fund Global Commodities in Australia.

At the weekend, key OPEC officials maintained they saw no need to consider pumping more oil now, despite the surge.

"I think there is enough oil in the market, I did not hear anybody calling for a meeting," Shokri Ghanem, head of Libya's National Oil Corporation and the country's top oil official, told Reuters in an interview.

OPEC, supplier of more than a third of the world's oil, is next scheduled to meet on Sept. 9 to discuss oil policy.