Oil prices hit new high

Oil prices jumped to a new record near USD$140 a barrel today.

Light, sweet crude for July delivery reached USD$139.89 on the New York commodity markets, a jump of more than four dollars after the greenback weakened in value and a fire halted production on a North Sea platform.

The surge came despite promises from Saudi Arabia over the weekend to boost output by 200,000 barrels a day next month – a move that was widely hoped to have reduced some of recent upward pressure on oil prices.

Analysts blamed the latest hike on the drop in the value of the dollar against the euro, making oil less expensive to investors dealing in other currencies.

Norwegian oil company StatoilHydro also halted oil and gas production on a 90,000-barrel a day facility after a fire broke out.

Oil last approached the USD$140 dollar a barrel mark on Friday after weak unemployment data raised fears about a US recession.

The dollar fell today against the euro – almost 0.8% at one point – after more weak economic data, this time about manufacturing activity in New York state.

Crude’s latest advance will mean no let up in spiralling forecourt prices for drivers, who this weekend were also faced with some Shell stations running dry after a strike by tanker drivers.

Yesterday unleaded was retailing at an average of 118.01p per litre, while diesel cost an average of 131.26p – both new highs, according to the AA.

StatoilHydro said the fire was soon extinguished on the Oseberg A platform yesterday afternoon and there was no need to evacuate staff.

The rig is 80 miles Northwest of the port city of Bergen on Norway’s western coast. Last year, the platform produced some 90,000 barrels a day, and it was not clear when production could begin again.

Oil now costs 40% more than at the start of the year.

The price of Brent crude oil futures also rose more than three dollars to USD$138.12 a barrel.

Oil industry expert John Hall said Saudi Arabia’s pledge to increase production next month was destined to have had little impact on prices.

He said: “I have to say it is too late.

“If they’d have said this six months ago, it might have had some effect.

“But the market has got it in its head that we are about to run out of oil, and is looking for negative news.”

Mr Hall, of John Hall Associates, added: “The market is extremely volatile at the moment. Any disruption to supply is immediately jumped on.”

Some analysts have forecast oil prices will hit the USD$150 level next month.