* Oil hits new record high above $142
* World stocks fall to a three-month low
* U.S. lawmakers urge CFTC to investigate market behaviour
By Jane Merriman and Santosh Menon
(Adds price poll, updates prices)
LONDON, June 27 (Reuters) - Oil held near a record high of
more than $142 a barrel on Friday, extending gains after surging
nearly 4 percent in the previous session, as tumbling global
stock markets helped to trigger a wider commodities rally.
U.S. light crude for August delivery <CLc1> was up 70 cents
at $140.34 a barrel by 1514 GMT, off a record high of $142.26.
London Brent crude <LCOc1> was up 33 cents at $140.16, off a
record high of $142.13.
World stocks sank to three-months lows initially on Friday,
pressured by a fast deteriorating global inflation picture which
has intensified concerns over the outlook for corporate profits.
This hastened the rush of investors' funds into commodities.
"It has a lot to do with asset allocations. The equity
markets are under serious pressure, breaking support levels.
When equities are going nowhere, the money is parked into
commodities," said Olivier Jakob at Petromatrix.
The MSCI main world equity index <.MIWD00000PUS> fell more
than 0.6 percent to its lowest since March, with the index on
track for the worst monthly performance in percentage terms
since September 2002, according to Reuters data. []
By contrast, commodities were strong, with gold near a
one-month record high [] while U.S. corn futures jumped to a
fresh record high. []
Gold rallied to its highest level in a month as oil's rise,
a weak dollar and tumbling world stock markets boosted the
metal's safe haven appeal.
CURB SPECULATION
A 40 percent surge in oil prices this year has prompted U.S.
politicians to take steps to try to curb speculation in the oil
market, that some blame for pushing up prices.
The U.S. House of Representatives on Thursday approved
legislation which directs the Commodity Futures Trading
Commission (CFTC), the futures market regulator, to use all its
authority including emergency powers to "curb immediately" the
role of excessive speculation in energy futures markets.
There is a series of draft laws in Congress to attempt to
address this issue, but energy market analysts say it has yet to
be proved that funds have driven up the price.
"We believe the factors driving oil prices higher are
fundamental and not speculative," Deutsche Bank said in a
research note.
"Oil needs to rise to $150 a barrel for oil as a share of
global GDP to reach the levels that occurred in the early
1980s," the bank said.
"At that point we will start to see more signs of demand
destruction and an eventual tipping point in oil markets."
Oil prices have doubled from $70 a year ago in response to
supply disruptions and geopolitical tensions in the Middle East.
Rising flows of cash into commodities from investors seeking to
hedge against inflation and the weak dollar have added to gains.
Oil, which had been trading in a range for most of this
week, broke out after Libya said it was studying possible
options to cut output in response to potential U.S. actions
against OPEC countries.
"We are studying all the options," Libya's most senior oil
official, Shokri Ghanem, told Reuters, adding oil producers
needed protection from what he viewed as U.S. attempts to extend
its jurisdiction beyond its territory.
Traders said any hint of bullish news was being used as an
excuse for funds to buy.
$150 is seen as the next "psychological" level, said Tim
Evans, Citi Futures Perspective analyst said in a note.
"The drumbeat for $150 by July 4th helped lift it to new
highs," he said.
An oil price poll by Reuters showed analysts' expectations
that oil will rise for the foreseeable future. The poll showed
U.S. crude in 2008 would average $113.24 a barrel, up by about
$6 from the last poll in May. []
Talks between oil workers and Chevron continued in Nigeria,
with the oil minister saying he was confident a deal could be
reached, but union officials left open the possibility of a
strike early next week.
(Additional reporting by Fayen Wong in Perth; Editing by James
Jukwey)
