June 6, 2008 / 4:46 PM / 10 years ago

Some oil pundits see crude hitting $140 or more

LONDON (Reuters) - Oil prices, which last month hit a record high above $135 a barrel, will probably rise to $140 soon, the head of Libya’s National Oil Corporation (NOC) said on Friday.

A man fills his truck up with gas at a gas station in Santa Monica, California, May 28, 2008. REUTERS/Lucy Nicholson

Investment bank Morgan Stanley, one of Wall Street’s biggest energy traders, was even more bullish, saying on Friday that crude may reach $150 by July 4 due to robust Asian demand and falling inventories.

“The general trend is for the price to continue up and up,” Shokri Ghanem, head of NOC, told Reuters in a telephone interview. “I think pretty soon it will reach $140.”

The Morgan prediction helped send oil above $134 on Friday, bringing the market within sight of the all-time high of $135.09 reached on May 22. Oil has risen from $100, a once unthinkable price, in January.

“We are calling for a short-term spike in oil prices,” Morgan Stanley analyst Ole Slorer said in a research note. “Middle East oil exports are stable, but Asia is taking an unprecedented share.”

Both forecasts came a day after Benoit de Vitry, a managing director at Barclays Capital, said at the Reuters Energy Summit he expected to see oil at $150 this year, though that did not mean it would remain at that level.

Barclays has taken a consistently bullish view on commodities and especially on oil.

WEAK DOLLAR

Dollar weakness and comments from Israel’s transport minister that an attack on Iranian nuclear sites looked “unavoidable” also fuelled the latest price rise.

Libya and fellow members of the Organization of the Petroleum Exporting Countries have blamed factors other than supply for oil’s record run, such as the weak dollar, political tension and speculation.

Others point to oil market fundamentals like supply and demand. Morgan Stanley said global supply is “stagnant.”

Crude’s six-year rally from below $20 in early 2002 has made oil-market bears an increasingly rare breed. The lowest forecast among 33 banks polled by Reuters as of May 23 is for oil to average $92.30 this year.

Among the most bullish is Goldman Sachs, the most active investment bank in energy markets, which said last month oil could hit $200 within the next two years, driven by poor supply growth.

Ghanem reiterated OPEC’s view that the group does not need to boost production and that the choppy trading of recent days showed that prices were being driven by factors outside its control.

“This is a real example of the speculation,” he said. “What can we do?”

Reporting by Alex Lawler, editing by James Jukwey

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