Oil struck an all-time high above $81 a barrel today, fuelled by concerns of a winter supply squeeze in the US, where an anticipated interest rate cut was calming recession fears.
Hurricane and other supply risks, lower US fuel stocks and fund flows into the commodity market from poorly performing stock markets have driven a rally that has taken US crude to new record highs for five straight trading sessions.
This evening US crude was up $1.18 to a record $81.75 a barrel following a $1.47 jump on Monday. London Brent crude was up 54 cents at $77.52.
The Organization of the Petroleum Exporting Countries agreed last week to boost output by 500,000 barrels per day (bpd) from November.
However, the move has failed to soothe concerns and many analysts feel that the increase will fall short of market needs come winter time.
Some OPEC members say the exporters may have to pump more if oil stays above $80 for long. US crude has climbed 33% this year.
Though crude prices have quadrupled since 2002, when adjusted for inflation the price is below the $90 peaks of the Iranian Revolution in 1979.
Goldman Sachs on Monday forecast US oil prices would surge to $85 a barrel by the end of the year, up $13 from its previous forecast, and said crude could climb as high as $90 due to tight supplies.
