Oil price hits fresh high

THE PRICE of oil hit a fresh high in trading over night as fears grow about supplies. US crude oil futures rose to $57.70 a barrel, the highest since the New York Mercantile Exchange launched the market in March 1983.

In London, Brent crude oil futures opened 29 cents higher at a new record of $56.80 a barrel, up more than 40% since the start of the year. Traders put last night's rise on the Asian markets down to continuing anxiety about last week's forecast of a possible oil spike above $100 and anxiety over US gasoline supplies.

Prices shot to record highs at the end of last week after Goldman Sachs said the oil market might have entered a 'super-spike' period that could drive prices as high as $105.

However, Opec, the Middle East-led oil cartel, today acted to cool the market. It said it was ready to boost oil production by another 500,000 barrels per day (bpd) or more if oil prices remain near record highs. The order to increase output is expected to follow in the next two weeks if crude prices remain above $55 a barrel.

Opec's 10 members, who are bound by agreed quotas, had already lifted production by an estimated 300,000-500,000 bpd in March over February.

It estimates that production by the 10 members came to about 27.7m bpd in February. Opec president Sheikh Ahmad al-Fahd al-Sabah said on Saturday he would start consulting member producers yesterday over a 500,000-bpd increase. It will be the second production boost in as many months after the cartel's mid-March increase failed to bring down soaring prices.

Increased crude prices are expected to filter through to higher prices at UK petrol pumps in coming weeks, which would be potentially damaging for the Government with an election expected in May.

A rise through the 80p a litre level for unleaded sparked fuel protests in September 2000. Forecourts currently charge around 82p a litre but the Government has already acted to diffuse tensions by delaying a tax rise on petrol until September this year.