(Adds details of Morgan Stanley report)
By Margaret Orgill
LONDON, June 6 (Reuters) - Oil soared by more than $6 a
barrel to over $134 on Friday, bringing gains in the last two
days to $12 as the dollar weakened further on a jump in the
jobless rate in the United States.
Remarks by Israel's transport minister that an attack on
Iranian nuclear sites looked "unavoidable" and a Morgan Stanley
report predicting oil could reach a record high of $150 by July
4, also sent crude prices roaring upwards.
"We are calling for a short-term spike in oil prices," the
bank said.[]
"Middle East oil exports are stable but Asia is taking an
unprecedented share."
U.S. light crude for July delivery <CLc1> was up $6.19 at
$133.98 a barrel by 1501 GMT, just over a dollar away from a
record high of $135 hit last month.
Oil had surged $6 in after-hours trading on Thursday in the
U.S., erasing two days of sharp losses triggered by worries that
high oil prices were starting to dent demand.
London Brent crude <LCOc1> rose $5.72 to $133.26.
The dollar fell further after figures showing the U.S.
economy lost jobs for the a fifth straight month and the
unemployment rate shot up to its highest in more than three
years. []
The dollar has fallen by more than one percent since
European Central Bank President Jean-Claude Trichet said on
Thursday a number of policymakers wanted higher interest rates
and a hike was possible as soon as next month. []
Investors have used oil and other commodities as a hedge
against the weaker dollar and inflation as the housing crisis
and high fuel prices batter the U.S. economy.
Comments from Israel's transport minister that an attack on
Iranian nuclear sites looked "unavoidable" given the apparent
failure of sanctions to deny Tehran technology with bomb-making
potential also helped drive prices higher.
This was the most explicit threat yet against Iran from
Prime Minister Ehud Olmert's government. []
The remarks from the Israeli government gave added momentum
to the rally, said Olivier Jakob of analysts Petromatrix.
"Financial money is flowing back into oil and commodities,"
said Jakob. "When the market is in such a strong rally, there is
a tendency to read the bullish headlines rather than the bearish
ones."
DEMAND
The fall in the dollar put longer-term worries about
weakening oil demand on the backburner, after they were
rekindled earlier this week when India and Malaysia decided to
raise domestic fuel prices to cope with bulging subsidy bills.
The International Energy Agency (IEA), an adviser to 27
industrialised countries, issues its latest forecasts next week
and has said it may lower its 2008 demand growth projection
further, after having already more than halved it to 1.03
million barrels per day (bpd).
But some analysts say subsidy cuts in Asia will not be
enough to slow oil use.
"World oil demand growth is still accounted mostly by China,
the Middle East and Latin America -- and through the summer,
there is no reason to expect a material slowdown in demand
growth in these areas," said Harry Tchilinguirian, oil analyst
at BNP Paribas in London.
(Additional reporting by Santosh Menon in London and
Maryelle Demongeot in Singapore; editing by William Hardy)
