Oil leaps $1.20 on supply fears

Crude oil rose more than $1 a barrel in New York yesterday after Algeria's energy minister, Chakib Khelil, said that global fuel demand remains ''very strong."

Supply may not be sufficient to meet demand in the fourth quarter, which is when consumption peaks, Khelil said in an interview in Washington. OPEC has 1 million to 2 million barrels a day of spare production capacity and would need perhaps 4 million to provide a cushion that would keep prices in check, he said.

''With OPEC close to capacity it is hard to see how they can increase production when it's needed," said Phil Flynn, vice president of risk management at Chicago's Alaron Trading Corp. ''If there is any disruption we will see prices soar."

Crude oil for June delivery rose $1.20, or 2.4 percent, to close at $50.92 a barrel on the New York Mercantile Exchange. Futures touched $49.03 in early trading, the lowest since Feb. 22. Prices are up 36 percent from a year ago.

Oil in New York has declined 13 percent since reaching $58.28 a barrel on April 4, the highest since the contract began in 1983.

World oil consumption will rise 2.1 percent this year, to 84.27 million barrels a day, the International Energy Agency said last month.