Crude tops $116 in volatile trading
Earlier, West Texas Intermediate dropped to an intraday low of $112.72.
ICE Brent was trading at $112.74/bbl in lunchtime trading. Earlier in the week the contract for June delivery hit a new high of $113.38/bbl.
Analysts regard the weak US dollar as a key driver enabling crude oil to continue posting fresh highs.
Supply worries also came to the fore after the main militant group in Nigeria's oil- rich region said it sabotaged a pipeline operated by a unit of Royal Dutch Shell on Friday.
Others note that tight US stockpiles are also adding to the bullish view. "US stockpiles are becoming a bit strained, when they should be actively replenishing," said MFGlobal's Mike Fitzpatrick in a research note. "The usual seasonal spate of refinery glitches are underway, so the bulls seems to still be holding a winning hand."
However, others pointed to softening demand growth in the near future.
Deutsche Bank reduced its global demand growth forecast for 2008 from 1.39mmb/d to 1.16mmb/d, therefore lower than the OPEC, IEA and DOE estimates.
"We remain concerned that [China and India] remain exposed to rising international commodity prices and inflation, and that this could result in monetary tightening and downside risks to growth," said chief energy economist Adam Sieminski.
"Since non-OECD Asia is the locus of the strongest demand growth in virtually every oil model, we remain cautious about the IEA's "case for decoupling."
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