Oil Rises Above $134 on U.S. Supply Drop

Crude oil rose to a record above $134 a barrel as U.S. stockpiles unexpectedly dropped and banks raised price forecasts because of supply constraints and demand growth.

Supplies fell 5.32 million barrels to 320.4 million last week, the biggest drop in four months, the Energy Department said. Oil for December 2016 delivery rose more than $19 a barrel, or 16 percent, after Goldman Sachs Group Inc. on May 16 raised its outlook to $141 a barrel for the second-half of the year.

Crude oil for July delivery rose $2.59, or 2 percent, to $131.57 a barrel at 11:27 a.m. on the New York Mercantile Exchange, after reaching $132.08. Prices have almost doubled from a year ago.

Brent crude oil for July settlement rose $2.90, or 2.3 percent, to $130.74 a barrel on London's ICE Futures Europe exchange. The contract touched $131.57 today, the highest since trading began in 1988.

The supply decline left inventories 0.9 percent below the five-year average for the week, the Energy Department said. Stockpiles were 0.8 percent above normal a week earlier.

Imports fell 7 percent to 9.24 million barrels a day, the report showed. Imports have averaged 9.86 million barrels a day so far this year, down 0.9 percent from the same period last year, according to department figures.

TradingEconomics.com, Bloomberg
5/21/2008 9:52:24 AM