Oil price surges to record high above $127

The price of oil rocketed to a record high point of $127,43 per barrel on Friday, as United States President George Bush prepared to urge Saudi Arabia to pump more crude, analysts said.

New York’s main oil futures contract, light sweet crude for June delivery, beat the previous all-time peak of $126,98 set on Tuesday owing to worries about tight supplies despite a downgrade to global oil demand growth for 2008.

The contract later stood at $126,90, up $2,78 from Thursday’s close.

London’s Brent crude contract for June spiked as high as $125,85, which was not far off the record $125,90 hit on May 9. It later stood at $125,44, up $2,81.

Bush arrived in Saudi Arabia from Israel on Friday for talks with the world’s biggest crude exporter on record oil prices that have hit Western consumers hard.

Bush aides have said that, at more than $125 a barrel, oil prices were set to top the agenda of his talks with King Abdullah and other Saudi officials.

“The global oil market remains indeed structurally tight,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

“Even though demand growth is showing some weakness, supply growth is also not there. The Organisation of the Petroleum Exporting Countries [Opec] continues to restrain supply and production in non-Opec states is not expected to be strong.”

Saudi Arabia is the main player in the 13-nation Opec, which pumps 40% of the world’s oil.

On Thursday, Opec trimmed its 2008 estimate of world oil demand growth, citing higher prices and slower economic momentum in major industrialised countries, including the US.

On Tuesday, the International Energy Agency suggested growth in global oil demand would slow this year.– AFP

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