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. Last Updated: 07/27/2016

Record Crude Prices Push OPEC to Act

MELBOURNE -- Oil prices raced to an all-time peak Monday, climbing toward $58 per barrel as OPEC signaled it would discuss a second output rise to try to quell the market's rally.

U.S. light crude hit a record $57.79 per barrel, surpassing Friday's high of $57.70, which was triggered by a forecast that prices could spike above $100 due to robust global demand and tight spare capacity. Early Monday, U.S. crude was up 38 cents at $57.65. London's Brent crude struck an all-time peak at $56.80 per barrel, marking a gain of 29 cents.

"I would have thought prices would struggle to go much higher. The market fundamentals suggest lower prices," said Mark Pervan, an analyst with Daiwa Securities in Melbourne. "I think they will struggle to get over $60 in the next couple of weeks -- that is a big psychological barrier."

OPEC President Sheikh Ahmad Al-Fahd Al Sabah said Saturday he would likely start consulting member producers Sunday about a 500,000-barrel-per-day increase to group supplies to cool the market.

The Organization of the Petroleum Exporting Countries raised output limits by 500,000 bpd to 27.5 million bpd in mid-March and left room for a second rise before a June ministerial meeting if prices failed to ease below $55.

"We had suspended [consultations] for a period of time because of the decline in prices," Sheikh Ahmad said. "But now, the reality of prices requires that we once again undertake communications for the purpose of consultations with the fellow OPEC oil ministers ... pertaining to the 500,000-bpd hike."

Nigerian Presidential Adviser on Petroleum Edmund Daukoru said Sunday the increase could happen within two weeks if prices stayed above $55 for at least the next 10 to 14 days.

"They shrugged off the first one, but it will be more difficult for them to shrug off the second one," Daukoru said Sunday, referring to the market reaction to OPEC's output rise.

An OPEC delegate said Monday that the group's 10 members under formal output limits, excluding Iraq, would pump 28.1 million bpd in April, which is about 400,000 bpd above estimated March production and 600,000 bpd higher than the current ceiling.

U.S. oil prices have surged 33 percent this year, with big-money speculative funds buying heavily on signs that robust demand growth in Asia's emerging economies and the United States would strain world supply.

Non-OPEC producers are pumping at full tilt and have little spare capacity to offer the market. Russian data released Monday showed the world's second-biggest exporter pumping 9.33 million bpd in March, steady from February.

It was the sixth month in a row that output had failed to rise and another sign of a slowdown in Russia's industry.

Prices have gained more than $3 since Thursday, when top energy derivatives trader Goldman Sachs released a report saying oil markets might have entered a "super-spike" period that could eventually drive them toward $105.

Concerns about the adequacy of U.S. gasoline stocks ahead of summer were also behind last week's price jump. U.S. gasoline futures struck an all-time high Monday at $1.7380 per gallon.