(Adds comment, updates prices)
By Santosh Menon
LONDON, May 20 (Reuters) - Oil rose to a new record near
$130 a barrel on Tuesday, driven by yet more bullish price
forecasts from investment banks and influential U.S. oil
investor T. Boone Pickens.
The market was also spurred by tight supplies of refined
products, especially diesel ahead of the U.S. driving season and
amid strong Chinese demand, besides a weak dollar.
U.S. light crude's June contract <CLc1>, which expires later
on Tuesday, rose to an all-time high of $129.58 a barrel and by
1441 GMT was trading was $2.20 higher at $129.25.
London Brent crude <LCOc1> was up $2.49 at $127.55.
ICE gas oil futures <LGOc1> rallied more than 2.5 percent to
a record of $1,238.75 a tonne.
"The middle distillates market remains a very strong
performer on a global scale, that market is very tight and is
performing well," said Eric Wittenauer at Wachovia.
The market drew fresh impetus after Pickens said he expected
oil prices to reach $150 a barrel this year.
Investment banks Societe Generale and Credit Suisse raised
their oil price forecasts for 2008 by $14 to $115 a barrel and
by $29 to $120 respectively.
Already, last week, the most active investment bank in the
energy markets Goldman Sachs had helped to push oil to a record
above $127 a barrel when it predicted oil prices would average
$141 in the second half of this year.
LACK OF REFINED PRODUCTS
Away from the headline-grabbing forecasts, analysts say oil
markets have been underpinned by tight fundamentals, especially
for refined products.
Tight supplies have come under increasing strain following
last week's earthquake in China, which disrupted natural gas
supplies and increased demand for diesel to be used in electric
generators.
For the latest data on the supply-demand balance, markets
are awaiting U.S. inventory data for release on Wednesday.
It is expected to show a rise in U.S. distillate stocks, as
well as small increases in gasoline and overall crude stocks,
according to a Reuters poll of analysts. []
That might not be enough to calm prices, which have also
been driven higher by a weak U.S. currency that makes
dollar-denominated commodities relatively cheap for investors.
The U.S. dollar fell on Tuesday after U.S. inflation data
added to concerns about the economy's strength and raised doubts
about whether the Federal Reserve will be able to raise interest
rates this year. []
"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.
(Additional reporting by Felicia Loo in Singapore and Haitham
Haddadin in New York; editing by William Hardy)
