LONDON - World oil prices soared to fresh record high levels on Thursday, with New York's main crude contract above 57 dollars per barrel for the first time, underpinned by robust global demand.
Amid worries over surging prices, OPEC president Sheikh Ahmad Fahd al-Sabah said the cartel was prepared to pump more than 30 million barrels per day in the fourth quarter -- compared to their new quota of 27.5 million bpd.
New York's main contract, light sweet crude for delivery in April, rose 1.04 dollars to reach as high as 57.50 dollars per barrel in electronic deals.
It later stood at 56.85 dollars in early pit trading.
On the New York Mercantile Exchange, the April contract had hit a record closing price of 56.46 dollars per barrel on Wednesday.
In London, the price of Brent North Sea crude oil for delivery in May jumped 1.27 dollars to reach a peak of 56.15 dollars per barrel on Thursday -- the first time it had broken the 56-dollar barrier.
It later stood at 55.25 dollars, up 37 cents on Wednesday's closing price.
"It is really a market pushed up by demand," Investec analyst Bruce Evers said.
"Everybody keeps on talking about China, but it is not just China, the demand in India, Brazil, North America is growing strongly, too."
Prices began hitting new summits Wednesday after the US Department of Energy released data showing falls to inventories of gasoline and distillates.
The DoE said gasoline supplies dropped by 2.9 million barrels and distillates by 1.9 million barrels in the week ended March 11.
The falls sparked worries that supplies would struggle to keep up with demand.
Earlier this month, the International Energy Agency said that economic growth in the United States and China would drive up oil demand this year as the Paris-based organisation raised its estimate for global oil demand in 2005 by 330,000 barrels per day to 84.3 million barrels per day.
"For supply to satisfy demand as we go through the second half of the year, there needs to be a flawless crude production system in operation with no problems," said Simon Wardell, Global Insight's senior energy analyst.
"Supply disruptions in Iraq, Nigeria, Russia or Venezuela would likely be enough to tip the balance, while any refining accidents would have a similar effect given the bottlenecks in the system."
The surge in prices, meanwhile, came despite a move by the Organization of Petroleum Exporting Countries on Wednesday to increase its output quota.
OPEC, meeting in Iran, agreed to raise its crude oil production ceiling from 27 to 27.5 million barrels per day, and said in a statement it would consider raising quotas by a further 500,000 bpd if oil prices remained high.
"In the fourth quarter, about which world markets are concerned, OPEC will be required (to pump) 30.3 million bpd, according to our figures," the cartel's president said Thursday.
"OPEC can do that, and we will still have a small spare capacity," Sheikh Ahmad added.
Earlier in the day he said OPEC could begin discussing a second increase in its oil production ceiling as soon as next week if crude prices held at current levels.
"Let us at least wait for a few days and see exactly how prices will go, if it continues as it is now, next week we will start our discussions."
Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said markets were "completely ignoring" Wednesday's output decision by OPEC, which supplies about 40 percent of the world's oil.
World oil prices have now more than doubled since early 2002.
Adjusted for inflation, however, they remain far below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today's money.
03/17/2005 17:01 GMT