Fears
of a shortage within five years propelled long-term oil futures prices
to almost $140 a barrel, further stoking inflationary pressures in the
global economy.
The spot price of Nymex West Texas Intermediate
hit a record $130.30 a barrel on Wednesday. On Tuesday investors had
rushed to buy oil futures contracts as far forward as December 2016,
pushing their prices as high as $139.50 a barrel, up more than $9.50 on
the day.

Veteran
traders said they had never seen such a jump and said investors were
increasingly betting that oil production would soon peak because of
geopolitical and geological constraints.
Neil McMahon, of
Sanford Bernstein, said: “Peak oil views – regardless of whether right
or wrong – are seeping into the market and supporting high prices.”
Anne-Louise
Hittle, of Wood Mackenzie, added that investors were shifting their
focus from the short-term to the medium-term, where supply fears played
a bigger role. Since January, long-term futures oil contracts, such as
those for delivery in 2016, have jumped almost 60 per cent, while
near-term prices have gone up 35 per cent.
That trend was
exacerbated by T. Boone Pickens, the influential investor who believes
world oil production is about to peak as aging fields run dry. He
warned that oil prices would hit $150 a barrel by the end of the year.
“Eighty-five
million barrels of oil a day is all the world can produce, and the
demand is 87m,” Mr Pickens told CNBC. “It’s just that simple.”
Mr
Pickens’s view is still in the minority in the oil industry. But
concerns over future oil supplies are fast moving into the mainstream
and influencing investors.
Politicians have expressed concern
that speculators are forcing prices higher and Joseph Lieberman, the
influential senator, said he was considering legislation to limit big
institutional investors in commodities markets.
Some energy
executives have warned that geopolitical supply constraints will mean
production will not be able to match demand as early as 2012 to 2015.
This comes as demand, especially from China, is set to continue
to grow, while that of the US slows. Adam Sieminski, chief energy
economist at Deutsche Bank, said: “The price is going to go up until
governments that subsidise oil consumption in Asia and the Middle East
can no longer afford it.”
So far China is doing the opposite,
having recently retrenched subsidies. Analysts say Chinese demand could
surge further as the country faces shortages of coal and hydropower.
Nervousness
about Chinese energy demand was exacerbated on Tuesday when officials
said 32 power plants had been forced to close because of coal shortages.
PetroChina and Sinopec, the two biggest domestic oil groups, also have diverted fuel supplies to the quake-hit Sichuan region.
Additional reporting by Geoff Dyer in Beijing