* Oil surges above $145 ahead of U.S. Independence Day
* Dollar steadies after European Central Bank rate hike
* U.S. crude stocks fall
* Focus on Morgan Stanley call for $150 oil, issued June 6
(Updates with ECB, prices)
By Ikuko Kao
LONDON, July 3 (Reuters) - Oil jumped to record highs above
$145 a barrel on Thursday as traders rushed to buy ahead of the
long holiday weekend in the world's top consumer to mark U.S.
Independence Day.
Expectation was high that a combination of a weak U.S.
dollar, lower U.S. crude stocks and tension between Israel and
major oil producer Iran would push prices to $150 before the
close of trade, in line with a prediction made last month.
Investment bank Morgan Stanley, one of Wall Street's biggest
energy traders, said on June 6 that crude could reach $150 by
July 4.
U.S. crude <CLc1> rose to a high of $145.85 a barrel. It was
trading $1.78 up at $145.34 by 1216 GMT.
London Brent crude <LCOc1> hit an even higher peak of
$146.69. It was trading $1.83 higher at $146.09.
"What is more concerning is it is very difficult to know why
it is going up. No one really knows the answer," said Colin
Morton with Rensburg Fund Management. "It seems to be about
momentum now. It's going up because it is going up."
Saudi Oil Minister Ali al-Naimi was more reluctant to make
predictions.
Asked at a conference in Madrid whether oil would hit $150,
he replied: "If I knew that, I'd be in Las Vegas."
RANGE OF FACTORS
Naimi also said Saudi Arabia would pump more oil if there
was demand for it, but that his customers were satisfied and
that the market was driven by a range of factors, but not by any
lack of supply.
One of those factors is the weakening U.S. dollar.
The currency inched up after the rate hike by the European
Central Bank turned out to be in line with expectation. But it
was still near a two month low against the euro. []
A weak U.S. dollar has helped to fuel this year's rally
across dollar-denominated commodities as investors seek to hedge
against inflation and falls in other asset classes.
Oil prices, which have been edging higher since the start of
the week, gained momentum on Wednesday after U.S. government
data showed a sharp fall in oil inventories.
Bullishness has been tempered slightly by evidence high oil
prices have started to erode demand as U.S. gasoline prices have
leapt to more than $4 a gallon.
But traders were reluctant to sell ahead of the U.S.
Independence Day holiday, which marks the peak of the U.S.
driving season, particularly in view of heightened tension
between Israel and Iran.
Speculation has mounted that Israel could launch an attack
on Iran's nuclear plans, which Tehran has insisted are purely
for peaceful purposes.
The market is concerned any conflict could disrupt oil
shipments from the Gulf through the vital shipping route, the
Strait of Hormuz.
Roughly 40 percent of the world's seaborne oil passes
through the Strait.
(Additional reporting by Alastair Sharp in London and Chua
Baizhen in Singapore; editing by James Jukwey)
