Crude oil futures soared for a fifth day above $126 a barrel on Friday as the dollar fell against the euro and other major currencies increasing demand for commodities as a hedge against inflation.
Crude futures for delivery in June rose $2.02 or 1.63 percent to $125.71 a barrel on the New York Mercantile Exchange by 1:23 p.m. today. Prices rose as high as $126.20 today more than double the prices a year ago.
In London ICE Futures Exchange, Brent crude for June delivery rose $2.32 or 1.90 percent to $124.10 a barrel but earlier the contract hit an all time record of $125.90.
The euro gained on speculation the European Central Bank will keep interest rates steady. By Friday afternoon in Europe the Euro traded at $1.5444 and $1.5463 by 12:53 p.m. in New York against the Dollar. The currency was trading up compared to $1.5404 in late trading Thursday night.
Investors purchase commodities such as oil to compensate for inflation and speculation is raising that record highs in crude are due to losses in the dollar.
Analysts at Goldman Sachs forecast prices of oil could range between $150 to $200 a barrel in a period from six to 24 months.
The U.S. currency fell 10 percent since September when the Federal Reserve started its program to cut interest rates to spur economic growth. So far the Fed has made effective seven interest rate cuts.
Supply worries also helped prices to rise on Friday as a major oil provider Nigeria halted oil production in April due to strikes and militant attacks that haven't been controlled yet.
Also in South America, the U.S. could sanction Venezuela as a state sponsor of terror, on speculation the government leaded by Hugo Chavez could be supporting rebels in Colombia. A report showed computer files indicate Venezuela's leader made concrete offers to arm guerrillas, according to the Wall Street Journal.
Analysts said Venezuela's response to a sanction could imply cutting exports of oil to the United States rising supply worries as it is one of the biggest exporters of oil to the nation.
Meanwhile the Organization of Petroleum Exporting Countries could schedule an extra meeting before September to consider rising oil production.
Shokri Ghanem chairman of Libya's National Oil Corp. said today OPEC would consider among other options the possibility of increasing output as a way to ensure market stability, Bloomberg noted.
OPEC is responsible for more than 40 percent of global crude production and has kept its output levels steady despite calls from consumer countries to rise it including petitions from President Bush.