Nymex crude oil futures near $115/barrel

By Tom Stundza -- Purchasing, 4/16/2008 11:38:00 AM

Crude oil prices hit record of $114.68/barrel in morning trading today as new government reports show crude and gasoline supplies fell more than expected last week. Oil prices futures have been high all week amid growing concerns about global supplies and now are the highest since futures began trading on the New York Mercantile Exchange in 1983.

An Associated Press report says traders were spooked by an International Energy Agency study saying Russian oil production dropped this year for the first time in a decade. The IEA report says global oil supply fell in March to 87.3 million barrels/day--and raised concerns whether Russia will have enough supply to help feed growing global demand. "In an emotionally driven market like we've got now, it just doesn't take much in the way of a headline to prompt a psychological response,” Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill., tells the Associated Press.

Oil also is gaining on demand from China, the world's second-biggest crude consumer, where the economy expanded 10.6% in the first quarter, government statistics showed today. “This bull market has got a long way to run,'' Puru Saxena, CEO of Puru Saxena Ltd., tells Bloomberg Television in an interview today from Hong Kong. “We have severe supply and demand imbalances all across the commodities complex, whether it's food, base metals, precious metals, energy.'”

Rising global demand for raw materials and a weakening U.S. dollar have led to record prices this year for many commodities as investors have continued to purchase futures of crude oil, metals and other raw materials because their returns have outpaced stocks, bonds and other financial instruments. Note that the UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, has gained 35% from a year ago. Lately, prices have been bolstered by production and delivery problems.