Oil prices briefly hit a new high above $57 a barrel yesterday and analysts said the recent rally appears to have steam left even after OPEC's president said the group may authorize pumping an extra half-million barrels a day.
The nearly $15 run-up in crude futures since the start of the year has coincided with dollar weakness and rising global demand at a time when there is little excess supply immediately available.
There are no fuel shortages, though traders are clearly pricing in that possibility, whether because of a terrorist attack, a refinery snag or some other unexpected supply bottleneck.
The Organization of Petroleum Exporting Countries tried to ease market jitters on Wednesday by raising its output quota by a half-million barrels a day and saying an additional quota hike might be forthcoming.
But traders were unimpressed by the largely symbolic move and pushed crude futures to a record settlement high Wednesday of $56.46 a barrel on the New York Mercantile Exchange.
Yesterday, light sweet crude for April delivery rose to a new intraday high of $57.60 per barrel before retreating to settle at $56.40, a decline of 6 cents that traders attributed to profit taking.
''I don't see anything that can take this thing down," said Michael Guido, director of commodity strategy in New York for Societe Generale. He said the fear of a supply problem -- not an actual supply problem -- is driving the market psychology.
Despite average gasoline prices above $2 a gallon in the United States, demand rose last week by 2 percent compared with a year ago, according to the Energy Department.