The price of oil hit a record high point of 130.28 dollars a barrel on anxiety about stretched supplies in the face of strong demand for energy, and as the dollar weakened.

Oil prices breaking records! - 21 / 05 / 2008 13:02

Oil prices headed towards a record high of 130 dollars a barrel on Wednesday on anxiety about stretched supplies in the face of strong demand for energy, analysts said.

New York's main oil futures contract, light sweet crude for July delivery, rose 35 cents to 129.33 dollars a barrel.

On Tuesday it reached an all-time high of 129.60 dollars.

London's Brent crude contract for July showed a gain of 46 cents to 128.30 dollars a barrel on Wednesday after spiking to a record summit of 128.53 dollars earlier in the day.

The market was awaiting the latest weekly snapshot of energy inventories in the United States -- the world's biggest consumer of oil -- to be published by US government on Wednesday.

Tony Nunan, of Mitsubishi Corp.'s international petroleum business, said that concerns over supplies not keeping up with demand were driving prices higher.

"The market is technically and fund-driven right now," he said on Wednesday, referring to investors buying into oil in hopes for higher returns.

David Moore, a commodity strategist at the Commonwealth Bank of Australia, said a weaker US dollar and "the recent trend for analysts to revise higher their oil price forecasts" are helping to push up prices.

Moore added there were reports that the need for diesel-fuelled power generation in earthquake-affected areas of China was boosting demand for the fuel.

Despite calls by the United States for the Organization of Petroleum Exporting Countries to raise output to cool prices, OPEC president Chakib Khelil said on Monday that the oil cartel would take no decision on production before a meeting in September.

Analysts said a decision by Saudi Arabia to raise output had not done much to lower crude prices. Many OPEC officials argue that record oil prices are being driven by speculators seizing on geopolitical unrest, such as in Nigeria -- Africa's biggest exporter of crude.

Eric Wittenauer, analyst at Wachovia Securities, said reports about growing tensions between Washington and Tehran heightened concerns about a conflict that could affect oil supplies in Iran and the wider Middle East.

In Washington on Tuesday the House of Representatives passed a bill authorizing the federal government to sue OPEC in US courts over alleged price fixing, in the latest swipe at the cartel over skyrocketing oil prices.

Bush has however threatened to veto the legislation, although its margin of passage in the House suggested Democrats may get a two-thirds majority needed to sustain the largely symbolic measure.

Oil prices have jumped more than a quarter since the start of 2008, when they struck 100 dollars a barrel for the first time.

AFP