THE price of crude oil came close to reaching a new record high overnight as the market shrugged off higher output from Saudi Arabia, traders said.
New York crude hit as high as $US127.77 a barrel, just off its all-time peak of $US127.82, reached on Saturday.
New York`s main oil futures contract, light sweet crude for June delivery, later stood at $US127.28 a barrel, up 99 cents.
London`s Brent crude contract for June rose 58 cents to $US125.57 a barrel overnight after spiking to a record $US126.34 on Saturday.
"We continue to see record highs posted on a daily basis as the bull run continues," MF Global senior energy broker Rob Laughlin said overnight. "It feels as though we`re likely to see more of the same."
Amid rocketing prices, Saudi Arabia has boosted oil output by 300,000 barrels per day (bpd) to meet demand and compensate for lower output from other producers, Saudi Oil Minister Ali al-Nuaimi said on Saturday.
However US president George W. Bush said the hike would not solve American energy problems.
Soaring prices of crude oil and petrol are adding inflationary pressures to an already weakening US economy.
Saudi Arabia, the world`s biggest producer of crude, said by June it would be producing 9.45 million bpd.
Mr Nuaimi reiterated OPEC`s longstanding view that global oil supply was balanced with demand.
Saudi Arabia is the kingpin within the 13-nation Organisation of Petroleum Exporting Countries (OPEC), which pumps 40 per cent of the world`s oil.
Last week, OPEC trimmed its 2008 estimate of world oil demand growth, citing higher prices and slower economic momentum in major industrialised countries including the United States.
Oil prices have risen by more than a quarter since the start of 2008, when they surged past $US100 for the first time.
In its latest monthly report published overnight, the independent Centre for Global Energy Studies said oil prices would continue to rise unless there was a worldwide recession.
"When they start to fall, the drop is likely to be steep," it warned.
Crude futures are being supported by supply disruptions in oil-producing nations, notably Nigeria, high demand for energy by China ahead of the Summer Olympics in August and a weak US currency which makes dollar-priced oil cheaper for foreign buyers.
Goldman Sachs, the most active investment bank in energy markets, last week predicted that oil prices would jump to $US141 during the second half of 2008.
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