(Adds diesel strength in paragraph 7, updates prices)
NEW YORK, May 13 (Reuters) - Oil surged to a record peak
near $127 on Tuesday after OPEC producer Iran said it was studying
a plan to cut output despite signs record-high prices are hurting
consumer nations.
U.S. crude <CLc1> jumped $1.43 to $125.66 a barrel by 12:29
p.m. EDT (1629 GMT), after striking a record $126.98 earlier.
London Brent crude <LCOc1> rose $1.01 to $123.92 a barrel.
President Mahmoud Ahmadinejad said a proposal to reduce
Iran's crude output was being reviewed by experts, the
semi-official Fars News Agency reported on Tuesday.
[]
"There has been such a proposal and it is under expert
review," Fars quoted Ahmadinejad as saying when asked about the
possibility of the world's No. 4 producer reducing output.
Iranian Oil Minister Gholamhossein Nozari earlier said Iran
was reviewing how much oil it pumps, but no decision had been
taken on any changes.
"We're in a market where anything bullish is going to be
able to push the price higher," said Peter Beutel, president of
Cameron Hanover.
Further support came from tight global supplies of distillate
fuels such as diesel after a snag at the Grangemouth refiner in
Scotland.
European middle distillate stocks fell sharply in April,
down 1.4 percent from March and 7.2 percent lower than a year
ago, data from industry monitors Euroilstock showed.
[]
DEMAND REVISIONS
Oil rallied back after closing lower on Monday when data
showed a decline in oil imports by No. 2 consumer China in April,
the first year-on-year drop in 18 months, raising further
questions about demand growth forecasts.
The International Energy Agency on Tuesday said record-high
oil prices will slow global oil demand growth this year to 1.03
million barrels per day (bpd), 230,000 bpd less than its
previous forecast. []
Despite the loss, the adviser to 27 industrialized countries
also said demand growth from emerging countries led by China and
the Middle East remained strong.
The U.S. Senate voted on Tuesday to suspend oil deliveries
to the country's Strategic Petroleum Reserve until crude prices
fall below $75 a barrel, repudiating the Bush administration's
policy of boosting the stockpile at time of record oil and
gasoline prices. []
Oil prices have surged sixfold since 2002 as supply has
struggled to keep pace with booming demand from emerging
economies, leading consumer nations to call upon OPEC to ramp
up production to help ease the sting of high fuel prices.
Officials from the cartel insist that speculators -- not a
lack of supply -- are responsible for the latest surge in prices
as investors pile into oil and other commodities as a hedge
against the falling dollar and rising inflation.
Weekly U.S. inventory data on Wednesday will provide further
direction to the market after an unexpected fall in distillate
stocks, which include heating oil and diesel fuel, pushed prices
higher last week.
U.S. crude inventories are expected to have risen for a fourth
straight week, while product stocks would also rise, helped by an
increase in refinery utilization, a Reuters poll of analysts
found. []
Investors wondered how long demand could hold up given the
sharp rise in oil prices, which first hit $100 a barrel in
January.
(Reporting by Matthew Robinson, Robert Gibbons and Richard
Valdmanis in New York; Peg Mackey and Barbara Lewis in London;
Maryelle Demongeot in Singapore, editing by Matthew Lewis)
