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Oil leaps the $146 barrier as Paulson says there's no quick fix
Gideon Spanier03.07.08
Oil prices today gushed through $146 to yet another record high, leaping by more than $2 a barrel.
US Treasury Secretary Hank Paulson, visiting London for talks with Chancellor Alistair Darling, warned there was no quick fix as a string of negative factors pushes up the price remorselessly.
Analysts have forecast oil will hit $150 this week and $170 by the end of the summer.
The weakness of the dollar against the euro and worries about the planned summer shutdown of some North Sea oilfields drove today's surge. Analysts say investors are also seeking an alternative to equities.
Brent crude was trading at $146.27, up $2.01 on yesterday and almost $4 since the start of the week, spelling more misery for motorists. It made further rises in gas and electricity bills an odds-on certainty.
Traders were also concerned about a drop in US stockpiles, the effect of the hurricane season on Mexico's oil production and sabre-rattling between Israel and Iran.
Paulson admitted the raging oil price increased inflation risks and "would prolong the slowdown". But he insisted the dollar was not a factor.
Air New Zealand today became the latest airline to push up fares by as much as 5% because of fuel costs. Hong Kong-based Cathay Pacific issued a profit warning yesterday.
Analysts see nothing to stop oil's rise. "Who would want to be short of oil at this moment in time?" said Rob Laughlin, senior broker at MF Global.
Andrey Kyuchenkov at Sucden added: "In the longer run, crude prices are still well supported by geopolitical concerns, persistent supply disruptions and fears over tight supplies."
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