Oil price scales new high

Moves by Riyadh and Washington to increase supply do little to halt price rise.

    Oil prices have effectively doubled in the last year, and increased sixfold since 2002 [AFP]

    But Saudi Arabia, Opec's largest producer, announced on Friday that it would produce 300,000 more barrels per day - about a 3.3 per cent output increase - as George Bush, the US president, visited Riyadh.
     
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    On the other hand, Opec's smallest producer, Ecuador, said on Friday that members should consider raising output to check the oil rally because high prices are hurting the poor.
     
    Rafael Correa, president of Ecuador, said: "I think Opec has to deal with this issue, because this is hitting all the poorest countries that are oil importers."
     
    Diesel, meanwhile, has taken centre-stage in the world energy crunch as tight power supplies in China, South Africa, Chile, Argentina and parts of the Middle East trigger a boom in demand to power electric generators.
     
    Chinese demand for imported diesel is expected to rise even further in June after this week's deadly earthquake disrupted gas supplies to major cities and as companies build stockpiles ahead of the summer Olympics.
     
    Analysts say weakness in the US dollar further spurred Friday's oil gains.
     
    Goldman Sachs, the most active investment bank in energy markets, however, predicted oil prices will average $141 a barrel in the second half of the year, due to shallow inventories.

    SOURCE: Agencies


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