Crude oil rose above $127 a barrel for the first time after Goldman Sachs Group raised its oil price forecast amid speculation Chinese diesel purchases will strain limited supplies.
Goldman boosted its crude-oil price forecast for the second half of this year to $141 a barrel, from $107, citing supply constraints.
Chinese traders many increase diesel fuel imports to run generators after State Grid of China said 0.5 per cent of China's total power capacity remains shut after an earthquake on May 12th.
Crude oil for June delivery rose as much as $3.31, or 2.7 per cent, to $127.43 a barrel in electronic trading on the New York Mercantile Exchange. It was at $126.76 a barrel at 1.34pm.
About 500,000 barrels a day will remain shut in by militant attacks in Nigeria for the "foreseeable future," the International Energy Agency said on May 13th.
A gasoline pipeline explosion that killed about 100 people in Nigeria yesterday prompted concerns of further supply disruption. The fire was caused accidentally during construction work, according to Nigeria's Civil Defense Corps.
Bloomberg