New high for crude on revised price prediction

Crude oil prices shot to a new high at $127.82 per barrel on Friday in New York after Goldman Sachs (NYSE: GS) upped its prediction for oil prices in the second half of the year to $141 per barrel, from its previous forecast of $107 per barrel.

Prices also rose on speculation that demand for diesel fuel in China will rise due to reconstruction work to repair the heavy damage caused by this week’s major earthquake there, and after Saudi Arabia apparently rebuffed yet another plea from President George W. Bush for the Saudis to increase oil production.

In Saudi Arabia on a visit, the President was reportedly told that the OPEC member nation does not have any purchase orders it cannot fill at present production levels.

In other oil-related news, the US Energy Department announced that it will halt oil shipments into the Strategic Petroleum Reserve beginning when the current purchase contract expires on July 1.

The decision to halt the shipments comes just days after the US Congress passed legislation directing the president to suspend shipments into the reserve as a possible way to lower soaring gasoline prices, a measure that President Bush had previously opposed on the grounds that the amount of oil being put into the reserve is not sufficient to have an effect on prices.

At last report, West Texas Intermediate crude for June delivery was up $2.38 from Thursday’s close to trade at $126.50 per barrel while Brent crude was up $2.03 to $124.66 per barrel.

Nymex June gasoline had added 4 cents to $3.21 per gallon and July heating oil was up 8 cents to $3.71 per gallon while July natural gas had dropped 22 cents to $22.34 per million British thermal units.