NEW YORK - Oil prices pushed closer to record highs Monday as traders poured more money into the market ahead of OPEC's meeting in Iran this week.
New York's main contract, light sweet crude for delivery in April, climbed 52 cents to 54.95 dollars a barrel, the highest close since October 26 and near the all-time record of 55.67 dollars.
In London, the price of Brent North Sea crude oil for delivery in April added 56 cents to close at 53.66 dollars a barrel.
The market was hit by a wave of buying ahead of the meeting of the Organization of Petroleum Exporting Countries (OPEC), expected to maintain its production ceiling at 27 million barrels a day.
"Traders are determined to get (the price) through that record," said Steve Bellino, analyst at Fimat USA, who said a dip in early trading prompted more buying.
"Fresh money came in, then people who had sold started buying back," he said.
Bellino said the market's "relentless momentum" is overshadowing fundamentals of supply and demand and pushing prices skyward.
"I would hope fundamentals will prevail," he said. "Short-term, the market shouldn't be here. Inventories are not desperate in the US by any means."
The early decline came after Saudi Arabia's oil minister Ali al-Nuaimi said his country would seek to raise the ceiling by 500,000 barrels per day (bpd) and would itself pump more crude later this year.
"World demand is forecast to grow in the last part of the year, which necessitates an increase in production," Nuaimi was quoted as saying by the kingdom's official SPA news agency.
"Hence Saudi Arabia will raise its production from the current level later this year," said Nuaimi.
He said the kingdom believed "there is a need to raise OPEC's output ceiling by half a million bpd during OPEC's upcoming meeting".
OPEC president Sheikh Ahmad Fahd al-Sabah also said Monday that the 11-nation cartel might decide to increase oil production if the market required it.
"Increasing production (will be) on the table" at Wednesday's meeting in Isfahan, Sheikh Ahmad, who is also Kuwait's energy minister, told reporters before leaving for Iran.
"If we find there is a need to hike output, we will deal with it in a responsible way," he said, referring to soaring oil prices.
Talk of a hike surprised the market but showed that OPEC wanted more control over soaring oil prices, analysts said.
"It is an indication that OPEC is in a price management mood. They are uncomfortable with prices being as high as now," said Barclays analyst Kevin Norrish.
"With prices above 50 dollars, OPEC in is the spotlight. So this meeting is viewed as an opportunity to try to exert a bit of downward pressure."
Some analysts believed a change to output was not on the cards.
That was because the second quarter of the year was "normally a period of low demand", said Robert Skinner, director Oxford Institute for Energy Studies.
"OPEC is not going to increase its output just at the time when demand is expected to dip on a seasonal basis.
The oil cartel would "probably just pass, and not increase quotas nor decrease them", he added.
03/14/2005 22:04 GMT