By R. Tuttle
Crude oil rose to a record above $143 a barrel, completing the biggest quarterly increase in nine years, on concern Israel may attack Iran over its nuclear program and disrupt supply from OPEC's second-largest producer.
Pressure on Iran to end uranium enrichment and the falling value of the U.S. dollar may drive prices to $170 a barrel, OPEC President Chakib Khelil said June 28. Kuwait, the fourth-largest OPEC producer, is taking precautionary steps to export oil if Iran closes the Strait of Hormuz, Kuna news agency reported.
``We are going beyond rhetoric at this point,'' said William Adams, managing director of JKV Global in Chicago. ``Israel's intentions are pretty clear. That's going to keep prices pretty high.''
Crude oil for August delivery rose $1.96, or 1.4 percent, to $142.17 a barrel at 10:01 a.m. on the New York Mercantile Exchange after rising to a record $143.67. The price has doubled in the past year. Oil has risen 34.6 percent so far this quarter, the largest gain since the first quarter of 1999.
Foreign ministers from the Group of Eight nations last week suggested more talks to coax Iran into opening its nuclear program to inspectors, after speculation the Islamic Republic faces an imminent Israeli strike.
Goldman Sachs Group Inc., Wall Street's most profitable bank, said in a report that supply and demand, rather than speculators, are responsible for oil's rally.
The U.S. House of Representatives last week approved a bill calling on the Commodity Futures Trading Commission to use its emergency powers to ``curb immediately the role of excessive speculation'' in any market it oversees where energy futures or swaps are traded.
Brent crude oil for August settlement rose $2.21, or 1.6 percent, to $142.52 a barrel on London's ICE Futures Europe exchange, after reaching a record $143.91.
Nigeria's rank among producers in the Organization of Petroleum Exporting Countries has slipped behind that of Angola amid violence by militants. Chevron Corp., Royal Dutch Shell Plc. and Eni SpA have all shuttered fields in Nigeria this month.
``Tensions ratchet up in Iran and troubles continue in Nigeria, drawing funds into the market,'' said Robert Montefusco, a broker at Sucden (U.K.) Ltd. in London. ``The weak dollar is also helping. The market does not want to break down just yet.''
The European Central Bank is expected to raise interest rates a quarter-percentage point to 4.25 percent, according to a survey of economists by Bloomberg News. The dollar has declined 8 percent this year against the euro.
Avoid the dollar ``at all costs,'' investor Jim Rogers said in Shanghai today. ``The best investments in 2008 are commodities and natural resources. Agricultural prices have much higher to go over the next decade. We have a shortage of everything including seeds.''
Hedge fund managers and other large speculators almost doubled their bets on rising prices in the week ended June 24, according to U.S. Commodity Futures Trading commission data.
Net-long positions in New York oil contracts, the difference between contracts to buy and sell the commodity, rose to 24,217 contracts. Long positions climbed from a five-month low a week earlier while contracts to sell oil fell a second week to a two- month low.