Oil hits historic high $139.89 despite 'Saudi promise'

LONDON (AFP) - Crude oil rocketed to a record high of almost 140 dollars a barrel Monday despite news that Saudi Arabia was ready to raise output to help cool soaring energy costs threatening economic growth. New York main oil futures contract, light sweet crude for July delivery reached 139.89 dollars, beating its all-time high of 139.12 dollars recorded on June 6. New York's main contract later pulled back to stand at 137.73 dollars, which was a gain of 2.87 dollars compared to Friday's closing level. "The current proposed (production) increase is set to lift Saudi's output to 9.7 million barrels per day in July, the highest monthly rate since August 1981, as reported by United Nations chief Ban Ki-moon over the weekend," said Kevin Norrish, an oil analyst at Barclays Capital. "However, in our view, the move does not seem to be enough to reverse the recent strength in prices, as it does little to repeal the longer-term expectations for tight demand-supply balances." Traders added on Monday that oil prices were winning support from a weaker dollar, which helps lift demand for commodities priced in the US unit as they become cheaper for foreign buyers. The market was also digesting news of a partial halt to oil production in Norway the world's fifth biggest exporter of crude after a fire had struck a North Sea platform on Sunday. Brent North Sea crude for August delivery struck a life-time high of 139.32 dollars on Monday. Later, in late afternoon London trade, Brent was at 137.56 dollars, up 2.45 dollars. UN Secretary General Ban has said Saudi Arabian Oil Minister Ali al-Nuaimi plans to raise his kingdom's production by 200,000 barrels a day in July on top of an increase of 300,000 barrels made in June. "They will respond positively whenever there is a request from their customers, so there is no shortage," Ban said of Saudi Arabia following a weekend visit to the oil rich kingdom. He added that "they don't want to be blamed" for high oil prices. An official Saudi announcement could be made at a weekend summit of heads of state, oil ministers and business leaders to discuss oil price concerns. The summit due next Sunday was being hosted by Saudi Arabia in Jeddah. "Many will be asking ... just what will it take to knock oil prices significantly lower?" Sucden commodities analyst Michael Davies queried on Monday. Oil prices broke through 100 dollars for the first time ever only at the start of 2008 and began 2007 trading at about 50 dollars. Global finance officials fear high oil prices pose a threat to world economic growth, while truckers and others in Europe and Asia are holding protests over the rising cost of fuel. World finance leaders who met in Japan over the weekend warned that runaway oil prices could imperil global economic growth. They urged producing countries to hike output and invest money to ensure they can pump enough supply in future.

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