(Recasts, updates prices)
By Santosh Menon
LONDON, May 20 (Reuters) - Oil rose to a new record above
$129 a barrel on Tuesday, spurred by strength in refined oil
products markets, led by diesel, and a weak dollar.
U.S. light crude's June contract <CLc1>, due to expire later
on Tuesday, rose to an all-time high of $129.31 a barrel and by
1324 GMT was trading was $1.85 higher at $128.90.
London Brent crude <LCOc1> was $2.05 cents up at $127.11.
ICE gas oil futures <LGOc1> rallied more than 2.5 percent,
reflecting the market tightness in diesel caused by a global
demand boom led by China, the Middle East, South Africa and
South America for use in generators to produce power.
"Slackening U.S. demand is being offset by brisk offtake in
Asian countries, and to a lesser extent in Europe, where the
stronger euro is cushioning the price increases," said Edward
Meir at MF Global.
"All this suggests that the overall crude picture remains
very much unchanged, leaving the market free to push higher on
the back of receptive fund money," he added.
The U.S. dollar extended losses against the euro and the yen
after economic data showed a smaller-than-expected rise in U.S.
producer prices. []
Market participants said fears of supply disruptions in oil
producers Nigeria and Iran, coupled with OPEC comments this week
suggesting a reluctance to raise output at its next meeting in
September were keeping the oil market tense.
China, the world's second-biggest energy consumer, released
a total of 8,312 tonnes of refined fuel from its strategic
reserves to help relief efforts in its earthquake-hit Sichuan
and Gansu provinces.
State Chinese refiners have already bought 650,000 tonnes
for June, near the record high of 842,000 tonnes imported for
January.
SUPPLY RISKS
Port workers, angry over government plans to privatise part
of the ports' activities, staged a one-day strike at the
country's largest oil hub, Fos-Lavera near Marseille, stopping
13 oil tankers from entering according to port authorities.
In Nigeria, where a spate of attacks and sabotage are
estimated to have shut in about 559,000 barrels per day,
security forces clashed with gunmen trying to rob a bank on
Monday outside the gates of a Royal Dutch Shell <RDSa.L>
compound on Bonny Island.
"The supply side risks are driving prices higher," said
Gerard Burg of National Australia Bank in Melbourne.
The Organization of the Petroleum Exporting Countries (OPEC)
reiterated oil markets were well supplied, and blamed high
prices on speculation, a weak dollar and geopolitical problems.
OPEC President Chakib Khelil said on Monday the group would
not meet before its September scheduled gathering and was
unlikely to boost output even then.
Forecasts in a Reuters preliminary poll on U.S. petroleum
inventory data due out on Wednesday called for a 600,000-barrel
rise in crude stocks, a 500,000-barrel gain in gasoline stocks
and a 1.3-million-barrel build in distillate stocks. []
(Additional reporting by Felicia Loo in Singapore; editing by
James Jukwey)
