(Recasts, adds trader comment, updates prices, previous
SINGAPORE)
By James Jukwey
LONDON, May 6 (Reuters) - Oil set a new record high above
$120 a barrel for a second day on Tuesday, resuming its advance
after a sharp downward move last week.
Supply disruptions in Nigeria, where a strike and attacks by
militants hit production, has continued to support a market that
is nervous about any threats to supply. [].
Tensions with Iran appeared to rachet higher when the
world's fourth-biggest oil producer refused to accept intrusive
inspections of its nuclear programme that the West fears could
be linked to weapons. []
U.S. light crude for June delivery <CLc1> was up 2 cents at
$119.99 a barrel, by 0940 GMT after earlier touching a record
high of $120.93.
London Brent crude <LCOc1> was up 26 cents at $118.25 a
barrel, after an earlier record of $119.07.
Gold was also strong, as oil's advance helped spur a rebound
from a four-month low last week. But gold <XAU=> is still some
way below a record of $1,030.80 an ounce reached on March 17.
"The downward move in oil last week now seems like only a
correction," said Christopher Bellew, senior vice president at
Bache Commodities.
"The effect of the credit crisis in the United States is
reducing people's disposable incomes and you'd expect this to
have an impact on the oil price, but it's not having any
impact."
Demand from emerging markets such as India and China is more
than compensating for the U.S. downturn, he said.
VULNERABLE
Oil is up by a quarter since the start of this year partly
due to the problems in Nigeria, plus weakness in the U.S.
dollar, which has boosted the price of commodities denominated
in the U.S. currency.
Last week, oil retreated almost $10 a barrel, partly due to
a reduction in speculative positions and as strikes affecting
Nigeria and North Sea came to an end.
Exxon Mobil <XOM.N> said on Tuesday it had returned oil
output in Nigeria to normal levels after an eight-day strike,
but Shell <RDSa.L> said its production there was still down by
about 164,000 barrels a day due to recent militant attacks.
"A lot of this is supply-driven, with the market very
vulnerable to any disruption in supplies," said Mark Pervan, a
senior commodities analyst at the Australian & New Zealand Bank.
"We're seeing large oil-producing countries coming up as a
question mark," he said.
U.S. President George W. Bush is expected to talk with
officials from Saudi Arabia about the effects of high fuel
prices on the U.S. economy on his trip to the world's top
exporter later this month. []
Bush has called on the Organization of the Petroleum
Exporting Countries to raise output to help bring down prices.
The U.S. dollar, whose decline in the past months has been
driving speculative investments in dollar-denominated crude and
other commodities, slipped further on Tuesday on continued
doubts about the health of the U.S. economy despite upside
surprises from recent economic indicators.
Later in the week on Wednesday, traders will watch the
weekly U.S. government report on fuel inventories, which is
expected to show a 1.8 million-barrel build in crude stocks, a
1.1 million-barrel rise in distillate inventories and a
100,000-barrel fall in gasoline stocks. []
(Additional reporting by Baizhen Chua in Singapore; editing by
James Jukwey)
