Oil Climbs Above $126 to Record as Euro Advances Against Dollar

Crude oil rose above $126 a barrel in New York to a record as the euro and yen advanced against the dollar, prompting investors to buy commodities.
The euro strengthened on signs the European Central Bank will keep rates at a six-year high to cut inflation. Dollar-based commodities like oil are often bought to counter the currency's weakness. Nigerian output fell to the lowest this decade in April because of a strike and attacks on oil installations.
``Oil is a safe haven because of the weak dollar and how badly the financial sector has been doing,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There are also geopolitical concerns about places like Nigeria and Venezuela that are propping prices up.''
Crude oil for June delivery rose $2.09, or 1.7 percent, to $125.78 a barrel at 9:28 a.m. on the New York Mercantile Exchange. The contract surged to a record $126.20 today. Prices are up 8.4 percent this week, the biggest weekly gain in more than a year. Futures are more than double from a year ago.
Brent crude oil for June settlement climbed $2.86, or 2.3 percent, to $125.70 a barrel on London's ICE Futures Europe exchange. The contract touched a record $125.90 today.
Goldman Sachs analyst Arjun N. Murti wrote in a report on May 6 that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.

Fund Buying
``There's been a paradox, prices have surged over the last week while we've had bearish headlines,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``Clearly there's been a lot of fund buying on the back of Goldman's super-spike repot. They were right on the nose last time.''
The Organization of Petroleum Exporting Countries, the producer of more than 40 percent of the world's oil, may meet before September to consider increasing output in an attempt to rein in record crude-oil prices, Libya's Shokri Ghanem said.
``We would consider among other options the possibility of increasing output as a way to ensure market stability,'' Ghanem, who is the chairman of Libya's National Oil Corp., said in a telephone interview today from Tripoli.