Here's why oil is spiking, thank Iran, though we don't import any from them, at least directly.
Dave.
Oil hits record near $127 as Iran mulls output cut
NEW YORK, May 13 (Reuters) - Oil surged to a record peak
near $127 on Tuesday after OPEC producer Iran said it was
studying a plan to cut output despite signs that record high
prices are hurting consumer nations.
U.S. crude <CLc1> jumped $1.77 to $126.00 a barrel by 12.04
p.m. EDT (1604 GMT), after striking a record $126.98 earlier.
London Brent crude <LCOc1> rose $1.10 to $124.01 a barrel.
President Mahmoud Ahmadinejad said a proposal to reduce
Iran's crude output was being reviewed by experts, the
semi-official Fars News Agency reported on Tuesday.
nDAH324373
"There has been such a proposal and it is under expert
review," Fars quoted Ahmadinejad as saying when asked about the
possibility of the world's No. 4 producer reducing output.
Iranian Oil Minister Gholamhossein Nozari earlier said Iran
was reviewing how much oil it pumps, but no decision had been
taken on any changes.
"That sounds like it would get people excited. We're in a
market where anything bullish is going to be able to push the
price higher," said Peter Beutel, president of Cameron
Hanover.
Oil rallied back after closing lower on Monday when data
showed a decline in oil imports by No. 2 consumer China in
April, the first year-on-year drop in 18 months, raising
further questions about demand growth forecasts.
The International Energy Agency on Tuesday said record-high
oil prices will slow global oil demand growth this year to 1.03
million barrels per day (bpd), 230,000 bpd less than its
previous forecast. nL13550242
Despite the loss, the adviser to 27 industrialized
countries also said demand growth from emerging countries led
by China and the Middle East remained strong.
The U.S. Senate voted on Tuesday to suspend oil deliveries
to the country's Strategic Petroleum Reserve until crude prices
fall below $75 a barrel, repudiating the Bush administration's
policy of boosting the stockpile at time of record oil and
gasoline prices. nWBT008979
Oil prices have surged sixfold since 2002 as supply has
struggled to keep pace with booming demand from emerging
economies, leading consumer nations to call upon OPEC to ramp
up production to help ease the sting of high fuel prices.
Officials from the cartel insist that speculators -- not a
lack of supply -- are responsible for the latest surge in
prices as investors pile into oil and other commodities as a
hedge against the falling dollar and rising inflation.
Weekly U.S. inventory data on Wednesday will provide
further direction to the market after an unexpected fall in
distillates stocks, which include heating oil and diesel fuel,
pushed prices higher last week.
U.S. crude inventories are expected to have risen for a
fourth straight week, while products stocks would also rise,
helped by an increase in refinery utilisation, a Reuters poll
of analysts found. [EIA/S]
Investors wondered how long demand could hold up given the
sharp rise in oil prices, which first hit $100 in January.
