Crude oil soared to a new record high on Friday above $127 a barrel, after Goldman Sachs significantly increased its projections for oil prices while trader's feared demand for distillate fuels from China will increase next month.
Goldman Sachs Group Inc. raised its average oil price forecast for the second half of 2008, from $107 a barrel to $141 a barrel as supply constraints continue to push crude prices higher, an analystsat the financial group said.
Crude oil for June delivery climbed $2.17, or 1.7 percent, to close at $126.29 a barrel on the New York Mercantile Exchange. The contract, which expires at the end of trading on May 20, closed out last week at $125.96.
Earlier prices soared to $127.82 a barrel the highest since the previous record high of $126.98 a barrel reached on May 13.
Prices rose today as traders feared that rebuilding in China after the earthquake disaster, will increase diesel fuel consumption in June, ahead of the summer Olympics. The earthquake has disrupted gas supplies to major cities and is reported to have left a death toll of 50,000 people.
Distillate fuel supplies, including diesel and jet fuel fell 6.7 percent to 477.6 million barrels in March compared to a year ago, according to a report from the International Energy Agency on Tuesday. Supplies have diminished significantly, after consumption rose during the winter season as more was used for heating.
Supporting the rise in prices, the dollar fell against the euro today amid reports that U.S. consumer confidence slumped to its lowest in 28 years this past month.
Brent crude futures for delivery in three months rose $2.36 or 1.95 percent to $123.59 a barrel by 2:23 p.m. in the London ICE Futures Exchange today. Brent Futures climbed to a record of $125.90 last Friday.