The price of crude oil came close to reaching a new record high today as the market shrugged off higher output from Saudi Arabia.
New York crude hit as high as $127.77 a barrel, just off its all-time peak of $127.82, reached in intra-day trade last Friday. New York's main oil futures contract, light sweet crude for June delivery, later eased somewhat to stand at $127.28 a barrel, up 99 cents on Friday's close.
London's Brent crude contract for June rose 58 cents to $125.57 a barrel this afternoon after spiking to a record summit of $126.34 last Friday.
Amid rocketing prices, Saudi Arabia has boosted oil output by 300,000 barrels a day to meet demand and compensate for lower output from other producers, Saudi Oil Minister Ali al-Nuaimi said on Friday. However US President George W Bush said the increase would not solve US 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 that by June it would be producing 9.45 million barrels of oil per day.
Nuaimi reiterated OPEC's long-standing view that global oil supply was balanced with demand. Saudi Arabia is kingpin within the 13-nation Organisation of Petroleum Exporting Countries, which pumps 40% 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 US.
Oil prices have risen by more than a quarter since the start of 2008, when they surged past $100 a barrel for the first time.
In its latest monthly report published today, the independent Centre for Global Energy Studies said that oil prices would continue to rise unless there was a worldwide recession.
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 and a weak US currency which makes dollar-price oil cheaper for foreign buyers.
Goldman Sachs, the most active investment bank in energy markets, last week predicted that oil prices would jump to $141 during the second half of the year.
