Investment bank Goldman Sachs raised its target price on Brent crude yesterday as the North Sea blend gained about $1 and set a fresh record in London trading.
Investment bank Goldman Sachs raised its target price on Brent crude yesterday as the North Sea blend gained about $1 and set a fresh record in London trading.
Brent crude soared to a new peak of $103.61 before closing slightly easier at $102.38 on the ICE Futures exchange.
Oil's recent bull run prompted Goldman to raise its 2008 price forecast for Brent crude to $95 a barrel from $80 and its 2008 prediction to $105 a barrel from $95.
Goldman predicted that the Brent blend would rise to £110 in 2010, up from $80.
Meanwhile, West Texas light sweet crude for April delivery rose $1.07 to an all-time high of $106.54 a barrel. It then eased to settle at $105.15 on the New York Mercantile Exchange.
News of poor jobs data had led to a fall of more than $1 in crude earlier in the session but analysts said the market had recently shrugged off bearish US economic data, seeing it leading to interest rate cuts and weakness in the dollar, which in turn has led to rising oil prices.
"The logic of the last few weeks has been to ignore US fundamentals," said Mike Wittner, global head of oil research at French investment bank Société Générale.
The dollar slid to new record lows yesterday against the euro and the Swiss franc, and also ceded ground to the pound.
Crude futures offer a hedge against a falling greenback, and oil futures bought and sold in dollars are more attractive to foreign investors when the US currency is falling.
Petroleum analysts said strong buying from hedge funds and other investors, tensions in South America and the Middle East, and Organisation of the Petroleum Exporting Countries's reluctance to pump extra crude are also providing support for for crude oil futures.
Oil prices were also supported this week by a surprise fall in crude stocks in the United States - the world's top consumer of petroleum products - and after the Opec cartel decided against changing output policy at its meeting in Vienna; the latter despite consumers' calls to export more oil.
The oil exporters' group, which pumps more than a third of the world's oil, has long argued high oil prices do not reflect oil market fundamentals and are being driven by speculators.
Influential Saudi Oil Minister Ali al-Naimi reiterated the view in remarks published in a North African newspaper yesterday, saying speculation was behind triple-digit oil and made it impossible for any organisation to control price movements.
"Today there is no link between oil (market) fundamentals and prices," he told Moroccan newspaper Asharq al-Awast.
"The duty of oil exporters is to make sure that fundamentals are healthy," he added. "If these fundamentals were stable and fulfil market needs, then there is no need to raise or decrease production."
