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article imageOil Passes $127 US Mark

By Bob Ewing     May 17, 2008 in Business
The cost of oil just keeps marching up and up, latest price increase blamed on increased Chinese demand for diesel fuel to power generators.
The price of oil keeps rising, where and when will it stop?
Yesterday, the cost of a barrel of oil passed the $127 mark for a brief period. On the New York Mercantile Exchange, light, sweet crude for June delivery hit a new peak of $127.82 US; then It fell back to $126.29, up $2.17 from Thursday's close.
The blame for this increase is being placed on the possibility of and increased Chinese demand for diesel fuel to power generators because of the earthquake.
Goldman Sachs issued a new forecast which upped its second-half price forecast to $141 from $107 a barrel. and this may have contributed to the price increase.
"To balance trend global GDP growth of 3.8 per cent against trend supply growth of 1.0 per cent, prices need to rise on average 14 per cent from here in the second half," Goldman Sachs said.
The weakness in the U.S. dollar and the expiry of options were cited as other possible contributors.
Saudi Arabia has said that it would increase its daily oil output by 300,00 barrels to make up for production shortfalls by OPEC members.
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