(Updates prices, adds details on U.S. President George W.
Bush's trip to Saudi Arabia, forecast on U.S. inventory data)
By Matthew Robinson
NEW YORK, May 5 (Reuters) - Oil jumped $4 to record highs
over $120 a barrel on Monday on the weaker U.S. dollar and
supply concerns from OPEC members Nigeria and Iran.
U.S. crude <CLc1> gained $3.52 to trade at $119.84 at 1330
EDT (1730 GMT) after surging to $120.36 earlier. London Brent
crude <LCOc1> rose $3.50 to $118.06 in light trade due to a
bank holiday in Britain, after hitting $118.58 a barrel.
"People are piling back up on crude oil due to the weakness
of the dollar and production issues in Nigeria," said Phil
Flynn, analyst at Alaron Trading in Chicago. "But it also looks
like momentum play after Friday's positive reaction to the
unemployment report."
U.S. government data released Friday that showed U.S.
payrolls fell by 20,000 jobs in March, a quarter of the losses
expected, helping to counter concerns that the weaker U.S.
economy could drag down oil demand. []
The dollar fell broadly on Monday, however, as forex
investors decided the world's biggest economy was still
struggling. A Monday report from the Institute for Supply
Management that showed the U.S. service sector grew
unexpectedly in April. []
Further support for oil came from Iran's announcement on
Monday it would not consider any incentives offered by world
powers that would constrain its right to nuclear technology.
[]
The comments come just three days after major powers said
they would make a new offer to convince the Islamic republic to
halt its nuclear plans, a process which the West believes
Tehran wants to master so that it can build nuclear weapons.
Iran's standoff with the West over its nuclear program
added geopolitical concerns and fundamental tightness last year
that sent crude to new highs.
Crude has continued to surge since then, extending a
six-year rally that has sent prices on a wave of investment by
speculators seeking to hedge against inflation and the weak
dollar.
U.S. President George W. Bush, who has called upon oil
cartel OPEC to increase output to help bring down prices, is
expected to talk with officials from Saudi Arabia about the
effects of high fuel prices on the U.S. economy on his trip to
the world's top exporter later this month. []
OPEC officials have rejected consumer nation's call to ramp
up production and blame speculators for surging oil prices.
Additional supply worries came from Nigeria, where Royal
Dutch Shell <RDSa.L> was forced to shut more of its production
after militants on Saturday attacked a flowstation in the
oil-rich Niger Delta. []
Renewed clashes between Turkey and Kurdish rebels in
northern Iraq also lent support to oil prices.
The Turkish army said on Saturday it killed more than 150
Kurdish PKK fighters in air strikes in northern Iraq last week,
but the rebel group denied this and security forces in the
region also expressed scepticism. []
A Reuters poll of analysts forecast a weekly U.S.
government report on inventories due out on Wednesday will show
a 1.8-million-barrel build in crude stocks, a
1.1-million-barrel increase in distillate inventories, and a
100,000-barrel fall in gasoline stocks.
(Additional reporting by Gene Ramos, Robert Campbell and
Richard Valdmanis in New York, Janet McGurty in London and
Fayen Wong in Perth; Editing by Christian Wiessner)
