(Updates prices)
TOKYO, May 22 (Reuters) - Crude oil soared to a fresh record
high above $135 per barrel on Thursday as a surprise drawdown in
U.S. crude oil inventories and a weaker dollar prompted heavy
fund inflows into the market.
Investment funds flocked into the market based on its strong
performance, with key U.S. crude oil having surged more than 20
percent since the start of the month and geopolitical and supply
concerns keeping traders reluctant to sell.
Recent bearishness towards the dollar added momentum to the
oil market, as the dollar's weakness increases the purchasing
power of buyers holding other currencies.
The front-month July NYMEX crude contract <CLc1> rose to a
record high of $135.04 a barrel on the Globex electronic trading
platform, up 1.4 percent from the New York settlement.
As of 0131 GMT, it was trading up $1.68 or 1.26 percent at
$134.85, after settling up $4.19 or 3.3 percent at $133.17 in New
York.
"The huge draw in crude inventories was surprising. All the
focus is on bullish factors. You simply have to follow the trend
and buy now," said Tatsuo Kageyama, an analyst at Kanetsu Asset
Management in Tokyo.
"You really cannot forecast how much further the market will
rally now. All I can say is the market will continue to rise,"
Kageyama said.
The U.S. Energy Information Administration said that for the
week to May 16 domestic crude stocks fell 5.4 million barrels to
320.4 million barrels, against a forecast for a 600,000-barrel
build in a Reuters poll of analysts. []
U.S. heating oil futures surged to a record high on Thursday,
carrying over a bullish trend from the previous day after
distillate stocks rose far less than expected last week.
Heating oil for June delivery <HOM8> reached a fresh record
high of $3.9704 a gallon on Globex on Thursday. It settled 13.34
cents or 3.53 percent higher at a record $3.9084 a gallon on
Wednesday.
Investors have been drawn into oil by a weak U.S. dollar,
which has made commodities relatively cheap for holders of other
currencies.
The dollar fell to a one-month low versus the euro on
Wednesday after the Federal Reserve cut its 2008 growth forecast
and warned of higher unemployment, reducing prospects of an
interest rate hike later this year. []
The market has been convinced to buy oil amid a series of
bullish forecasts, while the outlook for the dollar is weak,
traders said.
Investment bank Goldman Sachs has said it thinks oil prices
will average $141 a barrel in the second half of this year and
could top $200 a barrel by 2010.
U.S. investor Warren Buffett, the world's richest person,
said on Wednesday he expects the dollar to keep falling as
policies needed to correct the slide had yet to be implemented.
[]
U.S. Energy Secretary Sam Bodman said record oil prices
fairly reflect tight supplies and strong global oil demand, and
speculators were not at fault for pushing up petroleum costs.
[]
(Reporting by Chikafumi Hodo, Editing by Michael Watson)
