Oil trades higher, G8 warns on soaring prices
Tue, Jul 08, 2008

OIL prices rose in Asian trading on Tuesday while leaders of the world's rich industrial nations warned of the dangers of soaring oil prices and called for an increase in oil production.

New York's main oil futures contract, light sweet crude for August delivery, was 91 cents higher at US$142.28 a barrel after slumping US$3.92 to close at US$141.37 on Monday at the New York Mercantile Exchange.

Brent North Sea crude for August was US$1.09 higher at US$142.96 from a drop of US$2.55 to US$141.87 a barrel on Monday in London.

'It seems to me like oil traders are looking with some interest at the headlines coming out of the G8 meeting,' said Mr Dave Ernsberger, Asia director of global energy information provider Platts in Singapore.

The New York contract struck a record high of US$145.85 and Brent hit an all-time peak of US$146.69 last Thursday.

Soaring oil and food prices pose a 'serious challenge' to stable worldwide economic growth, Group of Eight (G8) leaders from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States warned on Tuesday.

At their meeting in Japan, the leaders also called for an increase in oil production and refining capacity to help stem soaring prices.

'The G8 leaders are clearly trying to talk this market down,' Mr Ernsberger said earlier on Tuesday.

In pre-summit talks, Japanese Prime Minister Yasuo Fukuda said he and US President George W. Bush agreed that urgent efforts are needed to tackle surging oil and food prices.

Oil prices have roughly doubled over the past year and the surge in prices is 'one of the most important issues at this summit,' said a Japanese foreign ministry official.

But European Commission chief Jose Manuel Barroso said there was not much the G8 can do in the near-term to influence the price of oil.

Analysts said prices eased on Monday after Iran's weekend offer to negotiate on its nuclear drive, but without a freeze on uranium enrichment, in its first comments since responding to an international package aimed at ending a long-running standoff with the West.

Iran, the world's number four crude producer, says its nuclear programme is for generating electricity while some Western nations fear it is developing nuclear weapons.

With supplies tight, oil prices have also moved in response to fluctuations in the US dollar, analysts said.

The greenback saw a brief boost on Monday but was lacklustre on Tuesday against major currencies in Asia.

A weaker US currency makes dollar-priced crude cheaper for buyers using other currencies. -- AFP


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