Oil hits new record; eyes US$150/bbl

Crude oil touched a new record high after a US government report revealed a larger than expected drop in inventories and tension continued between Israel and Iran. Anxiety over the US employment report and an impending rate hike by the European Central Bank (ECB) also added fuel to the fire. However, crude oil fell from near a record after reports that Iran will respond to an offer from leading countries to persuade the Islamic nation to drop its nuclear program. The simmering tension in the Middle East will subside if indeed Iran decides to stop nuclear research. On Friday, crude oil for August delivery fell as much as US$1.41, or 1%, to US$143.88 a barrel in electronic trading on the New York Mercantile Exchange, in London trading. The contract had touched a new record high of US$145.85 on Thursday.

The Energy Information Administration's weekly inventory report showed that crude supplies fell slightly more than expected while gasoline stockpiles unexpectedly rose. The EIA said US oil stockpiles dropped to the lowest since January. Meanwhile, Russian President Dmitry Medvedev said prices will climb to US$150 per barrel. He said in Moscow that high oil prices may slow global economic growth. Russia is the world's second-largest oil producer after Saudi Arabia. The US jobs report was mostly in line with forecasts and the dollar seemed to withstand the rate increase by the ECB. The ECB raised its benchmark refinancing rate, currently at 4%, by a quarter percentage point to check inflation, which touched 4% in June, more than double the central bank's target of just less than 2%. The US financial markets were shut on Friday on account of July 4 holiday.