Oil hit a new record high above $85 a barrel today as a robust demand picture amid booming commodity markets and fresh geopolitical worries put tight oil supplies into sharp focus.
US light, sweet crude for November delivery was $1.15 higher at $84.84 a barrel by 12.22pm, off a new record high of $85.19 - its fifth straight session of gains. London Brent crude was $1.21 higher at $81.75, off its record high of $81.93. "A run at $90 is now seen as reasonable," Citigroup analysts said in a note.
Oil has remained above $80 for most of the past month after soaring from below $70 in mid-August, fuelled by a mixture of supply concerns ahead of winter and record lows for the dollar, which has driven speculators to buy oil as a hedge.
Regulatory data released on Friday showed that speculators on the New York Mercantile Exchange crude oil market increased their net long positions in the week to October 9 th.
Analysts said mounting evidence the global economy had largely shrugged off the financial market credit crunch and would grow underpinned a bullish oil outlook, especially against a backdrop of disappointing crude supplies, especially from non-OPEC producers.
The Organization of the Petroleum Exporting Countries (OPEC), poised to boost supplies by an extra 500,000 barrels a day from November 1st, today raised its forecast for demand for its oil this winter and said it appeared more likely that top consumer the United States would avoid a sharp economic slowdown.
US Energy Secretary Sam Bodman said last week the US economy had been "remarkably resilient" to record high oil prices. Analysts said the tension that erupted last week after the Kurdistan Workers Party (PKK) said it would move back into Turkey from northern Iraq and target the Turkish government, had helped inject nervousness into an already stretched market.