Oil prices rallied above $136 in New York but slipped in London today as the market digested the latest demand and supply forecasts from the International Energy Agency.
New York's main oil futures contract, light sweet crude for July delivery, jumped $1.90 to $136.25 a barrel. The contract had surged to a lifetime high of $139.12 last Friday, when it surged a record-busting $10.75 in just one day's trade.
Meanwhile Brent North Sea crude for July delivery fell 55 cents to $133.36, after hitting a historic peak of $138.12 last Friday.
US President George W Bush said today that a Saudi proposal for a meeting between major oil producers and consuming nations to discuss soaring prices was 'interesting'. Saudi Arabia called yesterday for the talks and reiterated its readiness to meet any increase in demand.
The Paris-based IEA said today it now expected global oil demand to average 86.8 million barrels a day this year, or 80,000 barrels a day below its estimate last month.
The IEA, the oil market watchdog for industrialised countries, also sent a strong message to reassure markets that it would release strategic oil stocks if supplies were disrupted by tension, or an eventual attack, over Iran's nuclear programme.
However, the price surge last week to almost $140 a barrel 'is not just about geopolitical risks - the supply situation remains tight,' the IEA said, signalling it was uncertain about how supply and demand will play out in the next six months.
Some analysts suggest that the $140 price was a bubble that could burst, while others argue that oil could soon smash through $150 amid fears about tight supplies and fervent demand from China and India.
