KUALA LUMPUR, July 2 – World crude oil prices climbed more than US$1 a barrel today, within reach of Monday's record high above US$143 on forecasts of tight supplies and a low dollar while world benchmark Thai B grade white rice fell on weak demand.
U.S. crude rose US$1.24 to US$142.21 a barrel at 2pm Malaysian Time while London Brent crude gained US$1.43 to US$142.10 two days after oil hit a record US$143.67 a barrel.
The International Energy Agency yesterday revised its global oil supply capacity forecast by 2.7 million barrels per day (bpd) to 95.33 million bpd by 2012, fuelling prices already lifted by tension between Iran and Israel.
Traders also bought crude on the weak dollar, which softened against the euro on Wednesday ahead of Thursday's European Central Bank meeting, widely expected to conclude an interest rate hike to deal with quickening euro zone inflation.
Supplies could also be cut as Iran's Revolutionary Guards had said it would impose controls on shipping in the Strait of Hormuz should the country be attacked. About 40 percent of all seaborne oil trade passes through the Strait, according to the U.S. EIA.
Adding to supply worries, OPEC President Chakib Khelil said the cartel did not have enough spare capacity to replace Iranian oil if Tehran were to cut exports due to an attack.
Meanwhile, the Reuters news agency reported that median price quoted by Bangkok exporters was $720 per tonne, down from last week's $770 and 33 percent below a record high of $1,080 per tonne in April.
Prices have eased significantly in recent weeks as the world's biggest importer, the Philippines, has completed its buying for the year and leading producers have planted additional crops to cash in on very high prices.
Traders expect Thai rice prices to fall in the next few weeks to $700 a tonne or equal to the 14,000 baht ($419) per tonne the government has guaranteed to pay farmers for unmilled paddy.
The government is expecting a harvest of 7.6 million tonnes of paddy rice from the June-July paddy crop this year, compared with about 4 million tonnes last year.
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