May 13. In global petroleum market news, oil prices flirted with a new record above $126 a barrel Monday but ended the day lower as investors opted for profit taking and an earthquake in China raised the possibility of lower demand. Light, sweet crude for June delivery jumped to a new all-time trading record of $126.40 a barrel in light trading on NYMEX before falling back to settle at $124.23, down $1.73 from Friday's closing record of $125.96. In London, June Brent crude futures fell $2.49 to settle at $122.91 a barrel on the ICE Futures Exchange. After setting new records for six straight sessions in a row, we are not surprised to see a slight correction and SOME profit taking. We expect the correction to continue due to a number of factors, including speculation over anticipated builds in tomorrow’s mid-week inventory report. According to our forecast, crude supplies likely rose 2 mn bbls last week, gasoline inventories may have risen 500,000 bbl while supplies of distillate fuel, including diesel and heating oil, probably went up about 1 mn bbl. Across-the-board gains would send a bearish signal to the market, we believe, since the drawdown last week raised red flags about tightness on the supply side. According to data released yesterday, China's April crude oil imports decreased against year-ago levels, the first monthly year-on-year decline in 18 months, although we believe this decline was a one-off adjustment as refiners ran down stocks after unusually high March purchases. News that China's imports were down in April was also a factor behind yesterday’s bout of profit-taking, but we still view the market as robust. Strength in distillates for power generation globally has supported crude in recent weeks, and signs demand could falter helped weaken the energy complex. As for yesterday’s catastrophic earthquake in the heartland of China, we think that the market’s knee-jerk bearish reaction was justified, although longer-term it will not slow the pace of oil consumption in that country. Booming demand in emerging economies such as China and India have sent oil prices up 6-fold since 2002, with the weak dollar also drawing a wave of speculators seeking a hedge against inflation over the past eight months. Moving forward, we expect red-hot prices to take a breather for a week or so, although more upside should come before long with the Memorial Day holiday – which marks the beginning of the summer driving season – right around the corner and the inevitable surge in gasoline demand despite sky-high U.S. gasoline prices.