Oil prices struck record highs above $142 on Friday as the US currency weakened and stock markets tumbled at the end of a volatile week for investors worldwide. New York light sweet crude hit a historic peak of $142.26 a barrel and Brent North Sea crude reached an all-time high of $142.13. “Crude oil futures made fresh record highs, with higher oil prices fuelling inflationary fears and thus hurting stock markets, which in turn triggered a further rally in commodities as investors seek better returns,” Sucden analyst Michael Davies said in London. Prices “continued to be buoyed by the dollar as the greenback continues its free fall descent this week,” he added. OPEC's president on Thursday predicted that oil prices could reach $170 this year owing to a weak dollar and geopolitical unrest. Crude futures crossed $140 for the first time on Thursday following the price forecast made by OPEC's president, Algerian Energy Minister Chakib Khelil, in an interview with television news channel France 24. After the records set Friday, New York's main oil futures contract, light sweet crude for August, slipped back to $140.85, still showing a gain of $1.21 from Thursday's close as traders banked their profits. Brent North Sea crude for August stood at $140.81, up 98 cents. The cost of oil has doubled in a year, with consumers blaming the surge on insufficient output from the Organization of Petroleum Exporting Countries. However OPEC, which produces 40 percent of the world's oil, argues that speculators are responsible for pushing up prices in reaction to a falling dollar and tensions in oil-producing countries, such as Iran, Iraq and Nigeria. A weak US currency makes oil priced in dollars cheaper for foreign buyers, thus pushing up demand for the commodity. In a volatile trading week, prices had closed down $3.50 on Wednesday after official data revealed an unexpected rise in stockpiles in the United States, the world's biggest energy consumer. The US Department of Energy said crude stockpiles 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. Oil prices had rallied at the start of the week after major energy producers ruled out significant output increases. Saudi Arabia did announce an increase of 200,000 barrels per day at a summit between producers and consumers in the Saudi city of Jeddah on Sunday but this had been previously announced and so failed to help the market much. Prices also shot higher on Monday after militants blew up a pipeline in Nigeria over the weekend, cutting output by 120,000 barrels per day, to add to concerns about exports from the country. Anglo-Dutch oil company Shell had earlier said it could not promise to deliver 225,000 barrels per day for June and July following an unprecedented raid on its offshore Bonga oilfield. Unrest in the Niger Delta has cut total oil production in one of Africa's biggest producers by a quarter over the past two years. European and Asian stocks mostly fell on Friday as oil prices shot to record levels, but losses were less than falls on other global markets hit by soaring crude costs and a weak US economy. Concerns are growing among investors that rising energy costs will fuel inflation and lead to higher interest rates worldwide, putting the brakes on global economic growth. “Inflation risk has rapidly replaced credit risk as the predominant issue facing global financial markets,” said Barclays Capital analyst Larry Kantor. “The effects of higher inflation are poised to work through the global economy in profound ways for the remainder of the year.” In European stock market trade, the Paris CAC 40 index was down by 0.84 percent at 4,389.10 points approaching the half-way mark. Frankfurt's DAX 30 shed 0.75 percent to 6,410.97 points, but in London the FTSE 100 was up by 0.19 percent at 5,528.90 points. Traders said the FTSE was in positive territory owing to large gains being won by heavyweight energy companies on the back of surging crude prices. While higher crude costs hurt most companies, they benefit oil companies as their profits jump. Earlier in Asian trading, Tokyo closed down by 2.0 percent, extending a losing streak to a seventh day, while Shanghai slumped 5.3 percent. Seoul closed 1.9 percent lower, Hong Kong shed 1.84 percent and Sydney lost 1.4 percent. “The fall in the US stock market (overnight) caused by surging crude oil prices and anxiety over outlook for the financial sector” sparked the selloff in Asia, said Tsuyoshi Segawa, equity strategist at Shinko Securities. A weak dollar was also weighing on Japanese exporters, he said. Asian investors took their cue from Wall Street where the Dow Jones dropped more than three percent on Thursday to its lowest finish since September 2006. “Market confidence has been hurt badly. So, further (stock market) weakness is possible over the next few trading sessions,” said Mega Securities analyst Alex Huang. Meanwhile in China, concerns over new share offers also weighed on shares there as investors worried that liquidity pressure would further impact the already weak stock market. The securities regulator said late Thursday that it would assess an application for initial public offerings in Shanghai by Everbright Securities and China South Locomotive and Rolling Stock Corp on Monday. The dollar fell against the euro on Friday, despite a downbeat survey on economic confidence in the eurozone, ahead of next week's expected interest rate rise from the European Central Bank. Shanghai's benchmark plunged more than 5 percent to a 16-month low and India's Sensex fell 4.3 percent. Japanese stocks dropped for a seventh day to a two-month low. Markets in Hong Kong, South Korea, New Zealand and the Philippines were off around 2 percent.
