Oil at $129, near record on global supply strain

                                
 By Felicia Loo
                                
 SINGAPORE, May 21 (Reuters) - Oil hovered just above $129
on Wednesday, within striking distance of the previous
session's record high as OPEC again said it would not raise
supply while demand rages on and a weaker dollar supports funds
buying.
                                
 The new front-month U.S. light crude contract for July
delivery <CLc1> stood at $129 by 0234 GMT. The June contract
that expired on Tuesday settled up $2.02 in New York, after
hitting a new intraday high of $129.60.
                                
 "A weak dollar boosts buying of commodities as a
counterhedge. There is growing demand in China but supplies
remain tight," said Mark Pervan, a senior commodities analyst
at Australia & New Zealand Bank.
                                
 The dollar steadied against the euro on Wednesday after
hitting a one-month low against a basket of currencies the
previous day. [USD/]
                                
 Despite record-high oil prices, members of the Organization
of the Petroleum Exporting Countries (OPEC) have repeatedly
rebuffed calls for more supplies from consumer nations hard hit
by the inflation in fuel costs, instead blaming the rally on
rampant speculation.
                                
 Speaking to Reuters in an interview during a visit to
Venezuela, OPEC Secretary General Abdullah al-Badri said oil
prices could keep rising if non-market factors such as the
weakening dollar continue to put pressure on prices, but that
OPEC would only act when market fundamentals showed a need to
do so. [ID:nN1848427]
                                
 Energy analysts say an OPEC decision to raise output could
help ease the price rally, which they say has been fuelled
largely by resilient world energy demand even as the United
States economy slows.
                                
 The U.S. House of Representatives approved legislation on
Tuesday allowing the Justice Department to sue OPEC members for
limiting oil supplies, but the White House threatened to veto
the measure because it could spur "retaliatory action against
American interests in those countries". [ID:nN20322903]
                                
 Persistent robust diesel imports into China, the world's
second-biggest energy user, have fuelled prices around the
globe. European gas oil's premium to London Brent crude hit a
peak of $40 last week, boosting margins for refineries.
                                
 Oil prices have risen sixfold since 2002 as surging demand
in China and other developing economies strained supplies and
drew in a wave of investor interest.
                                
 Billionaire investor T. Boone Pickens said on Tuesday he
expected oil to hit $150 a barrel this year.
                                
 The prediction came on the same day two investment banks
raised their 2008 crude price forecasts and two weeks after
Goldman Sachs said a barrel could fetch $200 by 2010.
                                
 Investment banks Societe Generale and Credit Suisse raised
their oil price forecasts for 2008 on Tuesday by $14 to $115 a
barrel and by $29 to $120 a barrel, respectively.
 (Editing by Clarence Fernandez)