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Oil prices rise to record $122

Oil prices rise to record $122
Oil futures blasted to a new record of $122 a barrel Tuesday, gaining momentum as investors bought on a controversial forecast of much higher prices and on any news hinting at supply shortages.

Oil prices rise to record $122 a barrel on supply shortages

Oil futures blasted to a new record of $122 a barrel Tuesday, gaining momentum as investors bought on a controversial forecast of much higher prices and on any news hinting at supply shortages.

A new Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years seemed to motivate much of Tuesday's buying, although a falling dollar and increasing concerns about declining crude production in Mexico and Russia contributed, analysts say.

Light, sweet crude for June delivery jumped to a new record of $122 a barrel before retreating slightly to trade up $1.92 at $121.89 on the New York Mercantile Exchange.

Oil prices have nearly doubled from about $62 a barrel a year ago, which Goldman sees as a sign that the world is in the midst of a "super spike" in oil prices. Analyst Arjun Murti said in a research note released Monday that prices would ultimately force demand to fall sharply.

Not everyone shares Goldman's view. Tim Evans, an analyst at Citigroup Inc., countered Goldman's analysis with a note predicting that crude prices could as easily fall to $40 a barrel as rise to $200 over the next two years because supplies are, as Evans put it, comfortable.

James Cordier, president of Tampa, Florida, trading firms Liberty Trading Group and OptionSellers.com, said Goldman's prediction isn't necessarily new: "We've heard numbers like these out of Goldman Sachs, especially over the last 12 months." But there is a type of investor who responds to such predictions by buying, Cordier said.

A falling dollar on Tuesday also gave traders reason to buy. Investors often buy commodities such as oil as a hedge against inflation when the dollar falls, and a weaker greenback makes oil cheaper to investors overseas. Many analysts feel the dollar's protracted decline is the real reason oil prices have nearly doubled since last year. Cordier said investors are also increasingly concerned about falling oil production in Russia and Mexico, which are both major oil producers.

And prices are still supported by the concerns about supply disruptions in Nigeria and northern Iraq that first drove crude past $120 a barrel on Monday. Militant attacks in Nigeria over the weekend cut some production at a Royal Dutch Shell PLC facility. In other Nymex trading Tuesday, June gasoline futures rose 5.24 cents to $3.1053 a gallon after earlier setting a new trading record of $3.1163. June heating oil futures rose 4.05 cents to $3.347 a gallon, and June natural gas futures rose 16.4 cents to $11.342 per 1,000 cubic feet. In London, June Brent crude futures rose $2.30 to $120.29 on the ICE Futures exchange.

www.TurkishMaritime.Com.tr

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