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Oil prices break $124

Crude oil topped $124 a barrel Thursday afternoon after European Central Bank decided to leave interest rates unchanged. General Secretary of the Organization of the Petroleum Exporting Countries Abdullah Salem El-Badri said Thursday although the oil prices rose sharply in recent months, there was clearly no oil shortage in the market. 

Light, sweet crude for June delivery surged to $124.61 a barrel in the after-market electronic trading on the New York Mercantile Exchange, the highest since oil futures started trading in 1983. Earlier in the afternoon crude futures rose to a record closing price of $123.69, trading up 16 cents up. In London, Brent crude futures for June delivery settled at $122.84 a barrel, trading up 52 cents.

Jean-Claude Trichet, president of the European Central Bank, told a news conference that the interest rates will remain unchanged to fight inflation. New York market reacted with a rising euro against the dollar. Crude futures waffled on Thursday morning after the Organization of Petroleum Exporting Countries denied shortage of oil supply and blamed the turmoil in equity market and a weaker dollar for recent price hike. Oil prices retreated to as low as $121.58 on NYMEX before scissoring up later. Oil prices touched an intraday record of $123.93 a barrel Wednesday after US Energy Department’s weekly report suggested a fall in distillate fuels supply.

General Secretary Abdullah Salem El-Badri said in a statement, that the Organization for Economic Co-operation and Development commercial oil stocks remained above the five-year average. Meanwhile, US crude inventories rose about 6 million barrels last week, which showed that the oil market was well-supplied. El-Badri pointed out that crude oil movements had showed that some member countries could not even find buyers for their additional oil supply. He insisted that the crazily rising prices could not reflect the fundamentals. The soaring prices were mainly driven by financial market developments and the increasing speculations in oil market which encouraged by the significantly depreciation of the US dollars.

El-Badri added that OPEC would be ready to act at anytime if the market shows a need for any further measures. The OPEC member countries’ daily average output remained more than 32 million barrels. In addition, a number of new OPEC crude oil projects have started to come on-stream and the current OPEC spare capacity is over 3 million barrels per day, according to El-Badri. (