Oil prices leap on prediction of $150

Crude oil rose above $129 a barrel for the first time after billionaire hedge-fund manager Boone Pickens said prices will reach $150 this year because supply isn't keeping up with demand.

The June contract for light, sweet crude traded as high as $129.60 on the New York Mercantile Exchange before settling at $129.07, up $2.02 from Monday's record high. The expiration of that contract, which ended with the close of Tuesday's trading, created additional volatility as traders scrambled to lock in positions.

It was the 10th time in the last 12 sessions crude prices have hit trading or closing records, if not both.

Producers are "running out of oil," Pickens, the founder and chairman of Dallas-based BP Capital, said on CNBC Tuesday, reiterating comments he made April 29. Goldman Sachs and Deutsche Bank also said that prices would rise.

"It's not just Boone Pickens," said John Kilduff, a vice president of risk management at MF Global. "Just about every big global bank has raised its price forecast in recent weeks."

Crude-oil futures have doubled in the past year.

"The supply surplus issues are continuing to pressure the market," said Donna Heidkamp, a senior trading adviser at RJO Futures.

Material from The Associated Press is included in this report.