(Updates prices, Reuters poll of analysts in last graph)
By Matthew Robinson
NEW YORK, May 6 (Reuters) - Oil shot to a record price over $122 a
barrel on Tuesday on supply worries and the weak dollar, extending a rally
that has doubled prices over the past year and has some experts forecasting
a potential spike to $200.
U.S. crude <CLc1> surged $2.03 to $122.00 a barrel by 2:12 p.m. EDT
(1812 GMT) after touching a record $122.73 earlier. London Brent crude
<LCOc1> gained $2.36 to $120.35 a barrel, after hitting a record $120.99.
Rising tensions with Iran, after the world's No. 4 oil producer refused
to accept inspections of its nuclear program that the West fears could be
linked to weapons, stirred supply concerns from the OPEC nation.
[]
Nigerian disruptions from militant attacks and a strike have also
underpinned prices since late April, adding to gains that have sent prices
for oil up about six-fold since 2002 as part of a wider commodity surge.
[].
Growing demand from emerging markets like China has supported the oil
rally, as supplies struggle to keep pace, with further strength for
dollar-denominated commodities coming from the slumping greenback.
"Demand from China and India, the falling dollar making oil an
inflation hedge, speculation, OPEC supply restraints, supply threats in
Iran, Iraq and Nigeria and refinery bottlenecks in the United States (is
pushing up crude)," John Kilduff, senior vice president at MF Goldman,
wrote in a research note.
High oil prices have hit U.S. refiners' profit margins, prompting some
to trim runs, but stoking supply concerns as the world's biggest oil
consumer heads into the summer driving season. Speculators have also poured
cash into commodities as a hedge against inflation since September.
The mounting supply problems and strong demand from emerging economies
prompted Goldman Sachs to forecast oil could reach $200 a barrel within the
next two years.[]
"We believe the current energy crisis may be coming to a head, as a
lack of adequate supply growth is becoming apparent," Goldman said in the
note.
"In our view, a gradual rally in prices is likely to be longer lasting
than a sharp, sudden spike."
U.S. President George W. Bush is expected to talk with officials from
OPEC kingpin 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, but the cartel has
blamed high prices on speculators and insist markets are well supplied.
Rising costs as well as wider problems with the economy have hurt U.S.
fuel demand, with the U.S. Energy Information Administration cutting its
forecast for U.S. demand by 90,000 barrels per day (bpd) in the second
quarter and 100,000 bpd in the third quarter. []
A weekly U.S. government report on fuel inventories due out Wednesday
is expected to show a 1.6 million barrel build in crude supplies, an
800,000 barrel rise in distillate inventories and a 100,000 barrel decline
in gasoline stocks, according to a Reuters poll. []
(Reporting by Matthew Robinson, Gene Ramos and Robert Gibbons in
New York, Jane Merriman in London, Baizhen Chua in Singapore;
Editing by John Picinich)
