(Adds Japan earthquake, paragraph 7)
By Richard Valdmanis
NEW YORK, May 7 (Reuters) - Oil prices rose more than a
dollar Wednesday to over $123 a barrel, extending further into
record territory as worries over tight world supplies of diesel
outweighed a boost in U.S. crude stocks.
U.S. crude <CLc1> leapt $1.49 to $123.33 a barrel by 1:44
p.m. EDT (1744 GMT) after hitting an all-time peak of $123.56.
London Brent <LCOc1> rose $1.84 to $122.15.
Crude prices have doubled in a year and risen sixfold since
2002 on escalating worries over inventories, adding pressure to
consumer economies already hard hit by a housing and credit
crunch and sparking widespread calls for more output from
producer group OPEC.
Wednesday's rally came after a U.S. government report
showed a decline last week in distillate inventories -- which
include diesel and heating oil -- that brought stockpiles in
the world's biggest energy consumer nearly 13 percent below a
year ago. []
Power supply tightness in China, South Africa, Chile,
Argentina, and parts of the Middle East have triggered a
worldwide boom in demand for diesel for use in electric
generators, adding to robust demand for use in Europe's
passenger vehicle fleet. []
There is a "bullish outlook for diesel," said Societe
Generale in a research note.
Traders said there was some concern that an earthquake in
Japan would force shut nuclear power plants near the tremor,
though Japan's public broadcaster NHK said there was no impact
on the facilities. []
U.S. retail diesel prices are running at a record $4.24 a
gallon, about 40 cents higher than gasoline at the pumps.
The report from the Energy Information Administration also
showed an increase in U.S. crude oil stockpiles of 5.7 million
barrels and an increase in gasoline supplies of 800,000
barrels, tempering the market's gains.
"Traders were trying to comb the EIA data for any bullish
feature and they found it in distillates," Jim Ritterbusch,
president of Ritterbusch & Associates, said.
The advance in crude oil prices to fresh highs came a day
after investment bank Goldman Sachs said oil prices could scale
$200 a barrel in the next two years.
The head of the state run company of OPEC member Libya also
said oil prices would likely rise further amid continued
investor interest in commodities and simmering global political
tensions. []
"I think it will go higher," Shokri Ghanem, head of Libya's
National Oil Corp, told Reuters in a telephone interview. "It
is the same old story -- speculation and geopolitics."
Traders remained concerned about supply disruptions in
Nigeria, despite the end last week of a strike which halted
Exxon Mobil output in the West African country.
"We all share the concerns over supply issues as Nigerian
production improves but is way off normal capacity, and of
course Iran's nuclear debate has resurfaced and will not go
away," MF Global Energy said in a research note.
Concerns over supplies from the world's No. 4 oil producer
resurfaced when Tehran said earlier this week it would refuse
nuclear inspections.
(Additional reporting by Ikuko Kao in London, James Topham in
Tokyo and Gene Ramos in New York; editing by Jim Marshall)
