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By Robert Rapier on Jun 26, 2008 with no responses

Oil Cracked $140 Today

Peak demand or not, oil prices show no signs of subsiding:

Oil Surges Above $140 to Record as Libya Warns of Output Cut

June 26 (Bloomberg) — Crude oil jumped above $140 a barrel to a record as Libya threatened to cut output, OPEC’s president said prices may reach $170 by the summer and the dollar weakened.

Libya may curb output because of a U.S. law that allows terror victims to seize assets of foreign governments as compensation. OPEC President Chakib Khelil said oil may surge on a European interest rate rise, France 24 reported. Oil, gold and copper climbed today as the dollar dropped because the Federal Reserve gave no signal of higher interest rates yesterday.

Crude oil for August delivery rose $5.09, or 3.8 percent, to $139.64 a barrel at 2:59 p.m. on the New York Mercantile Exchange, a record settlement price. Futures touched $140.39 today, surpassing the previous intraday record of $139.89 reached on June 16.

I think you’re seeing a clear flight from equities into commodities, said Kyle Cooper, an analyst at IAF Advisors in Houston.

Record oil prices helped send U.S. stocks tumbling. The Standard & Poor’s 500 Index plunged 38.82, or 2.9 percent, to 1,283.15 in New York. The Dow decreased 358.41, or 3 percent, to 11,453.42.

I am starting to think Matt Simmons could win his $5,000 bet that oil will average $200 in 2010. (I still think he’s likely to lose, but at one time I thought he was sure to lose).