NEW YORK – Crude oil prices marched to new heights of close to $60 a barrel Monday as worries about a possible winter fuel crunch stoked buying and forced OPEC to consider releasing extra crude.
U.S. light crude moved to a record for the second successive session, hitting $59.52 a barrel, before settling up 90 cents at $59.37 on the New York Mercantile Exchange (search). Brent futures for August traded in London climbed 24 cents to $58 a barrel, having hit a fresh peak of $58.58..
NYMEX contracts for delivery in the last four months of the year, when oil demand seasonally picks up in the northern hemisphere, all traded above $60.
"The main reasons for the continued momentum remain the same as they have been throughout the strong push up over the past month --- the perception of a tight balance for the back end of this year in a market with limited slack," said Kevin Norrish of Barclays Capital.
OPEC (search) President Sheik Ahmed Fahd Al Ahmed Al Sabah said Monday that "if the prices continue to the end of this week at the same level, I will start consulting my colleagues to release the 500,000." Asked by reporters in Kuwait what he meant by the end of this week, the minister said Friday.
Last week the oil cartel agreed to raise its official production ceiling to 28 million barrels, but that failed to soothe traders because OPEC's output had already exceeded that level as producers seek to cash in on high prices. Including Iraq, which is not bound by the quota system, OPEC is pumping close to 30 million barrels a day, or about 35 percent of global demand.
"We have been expecting prices to come down for a while but this is clearly not the case. The rally is definitely sustained by gasoline demand in the United States, posting a 3 percent yearly growth, which is seen as extremely strong," said Deborah White, energy analyst with SG Securities in Paris.
"People are trying to push prices through $60," she added.
While Nymex oil futures are more than 50 percent higher than a year ago, they are still below the inflation-adjusted high above $90 a barrel set in 1980.
Analysts said unlike the record prices last year, which were driven largely by concern over geopolitical events in oil-producing countries such as Nigeria, Saudi Arabia, Iraq and Venezuela, this year's trend has more to do with speculative buying, continued supply fears and limited excess production capacity.
ANZ Bank energy analyst Daniel Hynes said the rise in oil prices last week was partly a reaction to the kidnapping of two German and four Nigerian Shell subcontractors who had been seized by gunmen on Wednesday. They were released Saturday. Nigeria exports some 2.5 million barrels of oil daily, making it the world's seventh-leading exporter and the fifth-biggest source of U.S. oil imports.
Reuters and the Associated Press contributed to this report.