Oil prices soared past $59 a barrel on Monday even as the president of OPEC said the group will consider raising its production target by half a million barrels as early as this week.
The Organization of Petroleum Exporting Countries boosted its output ceiling by that amount just last week. The move appeared to have little impact on prices, which have risen by almost $12 a barrel in the past month because of concerns about limited refining capacity and rising demand for gasoline and diesel.
Light sweet crude for July delivery climbed 90 cents to settle at $59.37 a barrel on the New York Mercantile Exchange.
Another development brokers were watching Monday was the threat of a strike by oil workers in Norway, the world's third-largest exporter. A strike could begin as soon as Wednesday because of a salary dispute, potentially slicing the country's daily output of 3 million barrels by a third.
"If you take off 1 million barrels a day in this market, it's going to get ugly," said oil broker Tom Bentz of BNP Paribas Commodity Futures in New York. "Let's just hope it doesn't happen."
OPEC President Sheik Ahmad Fahd al-Ahmad al-Sabah said Monday that "if the prices continue to the end of this week at the same level, I will start consulting my colleagues to release the 500,000." Asked by reporters in Kuwait what he meant by the end of this week, Sabah said Friday.
U.S. gasoline prices averaged $2.16 a gallon, an increase of more than 40 percent in the past two years, the Energy Information Administration said. Data that it released last week showed that gasoline demand nationwide was up almost 3 percent from a year ago during the four weeks ended June 10, to nearly 9.5 million barrels a day -- a growth rate that surprised many analysts.
"The economy has accepted $50 oil. We accepted $2 gasoline, too," said Boone Pickens, who mounted takeover attempts of several major oil companies in the 1980s and now runs a billion-dollar energy investment fund in Dallas. "I think within a year from now, you're probably looking at $3 gasoline and you're probably looking at something over $60 for oil."
While soaring jet fuel costs have been a major problem for the airline industry, higher energy prices have not taken as much of a toll on the broader economy as many analysts had previously feared. In the first three months of the year, the U.S. economy grew at a 3.5 percent annual rate, according to the Commerce Department, slightly slower than the 4.5 percent pace a year earlier.
The prospect of another attempt by OPEC to cool prices did not impress brokers, who said the effort could actually backfire by highlighting the group's dwindling excess production capacity.
Still, "it looks like we might have difficulty holding these levels," said Mike Fitzpatrick, an oil broker at Fimat USA in New York. "You're seeing a great deal of reluctance among buyers to pay these higher prices."
Oil analyst Andrew Lebow at Man Financial in New York said, "Once we're in this $55 to $60 area, it's been kind of hard to justify. But it is what it is. It seems like we'll hit $60 at this point."
In London, Brent crude for August delivery settled 45 cents higher at $58.32 per barrel on the International Petroleum Exchange.
Last week, OPEC agreed to raise its official daily production ceiling to 28 million barrels, starting July 1. That failed to soothe traders because OPEC's output is already exceeding that level as producers seek to cash in on high prices.
Analysts said that unlike the high prices last year, which were driven largely by concern over geopolitical events in oil-producing countries, this year's trend has more to do with speculative buying, continued supply fears and limited excess production capacity.