SAN FRANCISCO (MarketWatch) -- Crude-oil futures reached a new record high Tuesday as continued concerns over the balance of supply and demand and a forecast of $150 by the year's end from Texas oil man T. Boone Pickens helped to extend a winning streak in prices that have already climbed almost 3% in two sessions.
Crude for June delivery climbed as high as $129.45 a barrel on the New York Mercantile Exchange. It was last up $2.10 at $129.15. Prices reached an all-time high of $129.58 in electronic trading.
The June crude contract expires at the end of trading Tuesday. Contract expiration often adds volatility to the market and exaggerates the moves in prices.
"There's so much bullish sentiment in the market. Banks are upping their price targets on oil, and that's feeding the frenzy," said John Kilduff, analyst at MF Global.
"They (the banks) are basing this on consumption outstripping supply. There are also some significant power plant shutdowns in China because of coal shortages," he said.
China's State Electricity Regulatory Commission said 32 of China's power plants have been idled due to a lack of sufficient coal supplies, according to Kilduff. "This should feed China's desire to import even greater amounts of diesel fuel ahead of the Olympics, in order to ensure sufficient electricity supplies for the games, a top priority."
Support for oil is also coming from a "seasonal rally in gasoline," said Darin Newsom, DTN senior analyst. And "heating oil has also moved to a new high, presumably on European and Asian diesel demand."
"Actual fundamentals in crude oil grow more bearish," Newsom said in emailed comments. He explained that "spreads have moved into contango," with deferred contracts holding premiums over nearby contracts.
On Nymex, June reformulated gasoline climbed by 6 cents to $3.298 a gallon after an intraday high of $3.30. June heating oil traded at $3.766 a gallon, up 9 cents.
The U.S. price for a gallon of regular gasoline climbed to another record of $3.80 Tuesday, according to AAA's Daily Fuel Gauge Report. That's up 8.9% from a month ago, and 19% above the year-ago price.
Lofty forecast
Higher markets forecasts for oil have also been contributing to the energy commodity's rally.
Speaking on CNBC-TV, Pickens said world oil supplies are declining and prices will continue to rise because output is not keeping pace with demand.
Speculators, Pickens said, have "nothing" to do with record prices.
Analysts at Action Economics pointed to "speculation that output won't meet the demand of refiners that are seeking crude to produce gasoline and diesel, despite Saudi Arabia's increased output" for prices hovering above the $127 a barrel level.
Credit Suisse said Tuesday it's upping its oil price estimates, to $120 a barrel this year, $110 a barrel in 2009 and $100 a barrel long term. The brokerage previously expected $91 a barrel oil this year, $90 in 2009 and $75 over the longer term. Read more.
Crude prices remained higher Tuesday after the government said the core producer price index, which excludes food and energy prices, rose 0.4% in April, more than the anticipated 0.2%. Read Economic Report.
"The April producer price index report contained mostly bad news -- at the earliest stage of production, crude material prices increased 3.2%. Excluding food and energy, crude materials prices increased a whopping 7.9%, a level exceeded only twice since record keeping began in 1972," said Tony Crescenzi, of Miller Tabak & co.