Crude oil rose more than $1 a barrel as Merrill Lynch & Co and Citigroup Inc increased their price forecasts amid concern that supply from outside OPEC isn't climbing as fast as expected.
Citigroup boosted its 2008 Brent outlook 22 percent to $116.60 a barrel, while Merrill Lynch raised its forecast by 14 percent to $114. The International Energy Agency lowered its estimate for non-OPEC output this year by 300,000 barrels a day to 50.04 million, in its monthly report yesterday.
"Supply trends are growing slower than demand," said Adam Sieminski, Deutsche Bank's chief energy economist, in New York. "Prices are going to continue moving higher until the market becomes convinced that supply and demand will be in better balance by 2010 and beyond."
Crude oil for July delivery rose $1.90, or 1.4 percent, to $136.25 a barrel at 9:26 am on the New York Mercantile Exchange. Futures, which reached a record $139.12 a barrel on June 6, are more than double the level of a year ago.
Brent crude oil for July settlement rose $2.07, or 1.6 percent, to $135.98 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $138.12 on June 6.
OAO Gazprom, the world's biggest natural-gas company, expects oil prices to reach $250 a barrel "in the foreseeable future" as competition for energy resources increases, Chief Executive Officer Alexei Miller said.
"We are witnesses of a big jump in the price of hydrocarbons," Miller told reporters yesterday in Deauville, France.
Saudi Arabian Oil Minister Ali al-Naimi said that producing and consuming nations should meet "soon" to discuss how to deal with the record cost of crude, which "isn't justified in terms of market fundamentals".
Saudi Arabia is the world's top oil exporter and the most influential member in the Organization of Petroleum Exporting Countries.
"It's a step in the right direction, and I hope it will end up with some decisions which will lift spare production capacity upwards," said Fatih Birol, chief economist at the IEA.
"The main expectations that we have from those discussions is that there is an agreement to have more investment."
The IEA is a Paris-based organization that advises 27 developed nations on energy policy.
Source: China Daily/Agencies
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