Crude Oil Nears $ 120

Crude oil futures closed above $US119 a barrel for the first time on Tuesday due to signs of shaky supply, sturdy global demand and a fresh low for the US dollar.

Light, sweet crude for May delivery settled at $US119.37 a barrel, up $1.89, or 1.6 per cent, on the New York Mercantile Exchange and in intraday trading rose as high as $US119.90. The May contract expired Tuesday. More active June Nymex crude settled at $US118.07 a barrel, up $US1.44.

June Brent crude on the ICE futures exchange in London settled at $US115.95 a barrel, up $US1.52, also a record.

Oil is now nearly double its closing price a year ago, and up 24 per cent in 2008. The latest impetus for buying came as Nigeria suffered further interruptions in output and China reported record oil imports last month.

"There doesn't seem to be anything on the horizon that makes you want to get out of black gold," said George Gero, vice president of global futures at RBC Capital Markets in New York.

Nigeria, already running below capacity because of security problems, was buffeted again after rebels hit two oil pipelines there Monday. Royal Dutch Shell PLC has been unable to gain access to the pipelines, which feed into a key export terminal, a spokesman said. On Monday, a joint venture that includes Shell said it had been forced to shut in about 169,000 barrels a day of crude exports from its Bonny terminal in southern Nigeria through May after a separate pipeline attack last week.

A threatened labour strike at Ineos PLC's 196,000 barrel-a-day Grangemouth refinery in the UK also stoked worries that a shutdown could disrupt production from North Sea oil fields.

At the same time, global oil demand is expected to rise about 1.3 million barrels a day this year to 87.2 million barrels a day, according to the International Energy Agency. Tempering concerns about the demand impacts of a slowdown in the US economy, China imported a record 4.09 million barrels a day of crude oil last month, final data from its General Administration of Customs showed Tuesday.

"From the point of view of investors, the supply and demand fundamentals don't look like they are going into oversupply territory anytime soon," said Bart Melek, commodities strategist at BMO Capital Markets in Toronto.

A major conference of the world's largest oil consumers and producers ended Tuesday with a measured statement about the risks of oil prices. The International Energy Forum, after meeting in Rome this week, said in a statement that "oil prices should be at levels that are acceptable to producers and consumers to ensure global economic growth, particularly in developing countries."