October 25, 2007 / 4:01 AM / 12 years ago

Oil hits record over $90

NEW YORK (Reuters) - Oil roared to a new record over $90 on Thursday as tight inventories and fresh signs OPEC will shrug off calls for additional oil from big consumer nations sent prices up nearly 4 percent.

An oil rig in a file photo. U.S. oil prices surged to $88 a barrel and London Brent crude hit an all-time peak on Thursday, after a slide in U.S. oil stocks renewed fears of an energy crunch in the northern hemisphere's peak winter heating season. REUTERS/File

U.S. crude settled up $3.36 to $90.46 a barrel after striking a record $90.60. The rise added to Wednesday’s gain of nearly $2. London Brent rose $3.11 to $87.48 a barrel.

Energy officials from OPEC nations Venezuela and Algeria said the producer group will not boost output when it meets informally in Saudi Arabia next month.

“The high prices are not coming from a lack of production,” Algerian Energy Minister Chakib Khelil said.

OPEC already has agreed to boost production by 500,000 barrels per day from November 1, but the United States has called on the group to increase output further, while No. 2 consumer China has said prices are too high.

Tracking the explosive rise in crude prices, heating oil futures hit an new all-time record, while gasoline futures rose to their highest level since mid-July.

WINTER CRUNCH?

Markets began their most recent surge on Wednesday after U.S. government data showed a much larger-than-expected 5.3 million barrel draw in crude stocks of the world’s top consumer.

“I think this is a continuation of yesterday’s rally off the surprisingly bullish inventory release,” said Eric Wittenauer at A.G. Edwards.

“One of the arguments being made in the recent rally was inventories are tight heading into winter months.”

Traders also were watching Washington’s decision on Thursday to designate OPEC member Iran’s Revolutionary Guard Corps a proliferater of weapons of mass destruction and its elite Qods force a supporter of terrorism.

Oil prices have more than quadrupled since the start of 2002. Prices have jumped roughly 45 percent this year on supply concerns, unprecedented dollar weakness and a shift of investor money into energy and commodities from other asset classes.

Gains have been limited only by concerns a U.S. housing slump could draw the economy into recession and limit demand.

OPEC’s secretary general repeated on Thursday there was no shortage of oil and added the weakening dollar was damping the windfall from record high prices.

“There is a lot of oil in the market,” Abdullah al-Badri told reporters in Beijing. “It is not really a bonanza for us, $90 a barrel.”

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