UA to Cut 950 Pilots

[Greg McDonald]

From NEWS.COM.AU:

WORLD oil prices smashed through the $US140 a barrel barrier for the first time today after the president of OPEC predicted fresh price spikes.

Algerian Energy Minister Chakib Khelil said crude, which has already rocketed in value in the past year, could hit $US170 later this year because of the ailing US dollar and geopolitical unrest.

New York's main oil futures contract, light sweet crude for August delivery, closed up a hefty $5.29 at $139.64 a barrel, marking a record finish.

The contract had earlier struck an all-time intraday price peak of $140.39 as the market digested the OPEC president's outlook.

In London, Brent North Sea crude for August delivery jumped $US5.50 to settle at an all-time closing peak of $US139.83. Brent had earlier streaked to a record $US140.56 in frenzied intraday trading.

Prices rebounded strongly after tumbling more than $US3 yesterday in volatile trade. Spiking prices are causing inflation angst in many world capitals.

"I predict probably prices of $US150 to $US170 this (northern) summer," Mr Khelil said in an interview with the France 24 news channel.

"It (the market) will probably fall a bit towards the end of the year," he said.

The OPEC president said that a weak US dollar was the main cause behind surging oil prices. The weakened US currency has made goods priced in the dollar, like oil, cheaper for purchasers armed with stronger currencies, stoking speculative oil demand.

Mr Khelil also cited Western "threats against Iran" over its nuclear power drive as another key reason for prices spiking on world markets. Oil prices have more than doubled in the past year.

"If (the threats) increase, I think the price of oil will rise further this (nortrhern) summer as it would coincide with stronger demand for gasoline, particularly in the United States," Mr Khelil said.

Petrol demand traditionally rises in the US, the world's largest oil importer, during the summer months as Americans take to the roads on holiday.

The OPEC chief said that the Organisation of the Petroleum Exporting Countries was ready to meet any additional demand for crude in the future. OPEC produces about 40 per cent of the world's oil.

Oil prices had cooled yesterday after a US Government survey showed an unexpected rise in energy stockpiles in the US.

The US Department of Energy said that reserves of crude had risen for the first time in six weeks, by 800,000 barrels, in the week to June 20. Analysts had expected a drop of 1.1 million barrels.

"The report also showed four week average gasoline demand is 2.1 per cent down from a year ago; this goes to show more and more people are reacting to high oil prices," said Nimit Khamar of the Sucden brokerage.