Oil prices jumps to new high above US$144

Source: Agencies  |   2008-7-3  |     ONLINE EDITION

OIL prices shot to a new record above US$144 a barrel yesterday as the government reported a bigger-than-expected drop in US stockpiles and the threat of conflict with Iran weighed on traders' minds.

The latest spike means a barrel of crude has gone up by nearly half since the end of last year, when oil was going for US$96 a barrel.

Light, sweet crude for August delivery rose as high as US$144.32 on the New York Mercantile Exchange shortly after the regular trading session ended. The contract also notched a new closing record, settling at US$143.57, a full US$2.60 above the previous high from a day earlier.

In London, Brent crude futures rose US$3.59 to settle at US$144.26 on the ICE Futures exchange.

Oil first traded above US$100 a barrel in January. It hit the previous trading high of US$143.67 Monday.

The Energy Department's Energy Information Administration said crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts predicted.

However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide, suggesting that record fuel prices are prompting a real shift in Americans' driving habits.

The inventory report was only one factor in Wednesday's rally, which came a day before investors left for a three-day weekend. US oil markets are closed Friday for July 4th.

"It's a combination of things," Phil Flynn, analyst at Alaron Trading Corp in Chicago, said of the run-up. "People are buying oil because they're worried about tight supplies, the weak dollar, war breaking out in Iran. It doesn't look like any of this stuff is going to settle down any time soon."

Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, left the market jittery.