Oil Rises Above $135 as OPEC Says It's Powerless to Stop Rally
Mark Shenk

May 22 (Bloomberg) -- Crude oil rose to a record above $135 a barrel as OPEC ministers said they could do nothing to stop the rally that has more than doubled prices over the past year.

Oil has risen 18 percent this month as banks increased price forecasts because of limited supply and demand growth. OPEC has "no magic solution'' to high prices, Qatar's oil minister said. The IEA, energy adviser to 27 nations, said it plans to reduce its long-term projection for oil supply.

"OPEC is impotent'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. "The only member with the power to do anything is Saudi Arabia and they are laughing all the way to the bank. They have no incentive to spoil the party as long there is no major demand destruction.''

Crude oil for July delivery rose 23 cents to $133.40 a barrel at 9:09 a.m. on the New York Mercantile Exchange after reaching $135.09, the highest since trading began in 1983.

"We are not in charge anymore, Shokri Ghanem, Libya's top oil official, told Bloomberg Television. "OPEC is producing as much as the market wants. It is speculation, it is geopolitics, it is dollar erosion'' behind the gains, he said.

Oil for July delivery has surged 5.6 percent this week while futures contracts for 2016 gained almost $19, or 15 percent, to over $145 a barrel on signs that demand will outstrip supply.

The Wall Street Journal reported earlier that the International Energy Agency will lower its 2030 supply projection to 100 million barrels a day from 116 million. The Paris-based IEA was founded in 1974 in response to the Arab oil embargo.

"We are trying to get a better understanding of depletion rates and expectations of productivity,'' Bill Ramsey, the agency's deputy executive director, said in a telephone interview. "There is growing awareness that raising world output is a problem,'' and it is "too early'' to give any estimates, he said.

Brent crude oil for July settlement rose 65 cents, or 0.5 percent, to $133.35 a barrel on London's ICE Futures Europe exchange. The contract touched a record $135.14 today.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.