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Last Updated: Tuesday, 21 June, 2005, 18:12 GMT 19:12 UK
$60 oil price threat still looms
Oil traders in New York
Some traders have taken profits as prices hovered around $60
The threat of crude oil at $60 a barrel continues to loom over markets, as oil prices hit new records on Tuesday.

US light crude pushed its way to $59.70 a barrel on Tuesday, breaking records for the second day in a row.

Oil prices resumed rising, ending brief respite in a four-day rally, which has boosted prices by more than $4.

Analysts are warning that strong demand for refined oil products, combined with supply threats, will keep pressure on crude prices.

Oil prices had dropped back early on Tuesday. In London, Brent crude dropped 26 cents to $58.06.

Oil market analyst Christopher Bellew of Prudential Bache said there had been "a little bit of a pullback" following the big price jump on Monday but there was "no sign of any sustained weakness,"

"The market is well supported by the strike threat in Norway and unrest in Nigeria, while demand [for petrol] is remarkably robust despite the high prices."

Norwegian dispute

The problems underpinning the surge in oil have not gone away.

Demand for oil is high in the United States, where car use is on the rise because of the summer holidays, and in China, where industrial production is racing ahead.

In Norway, a wage dispute among 500 workers is threatening production at Statoil, which pumps out 920,000 barrels a day.

A deadline for a settlement has been set for the end of Tuesday.

US light crude

There are also concerns that refiners will not be able to meet spiralling demand for oil in the second half of the year with stocks of US distillates - diesel and heating oil - running below-average.

"We may see a lot of funds selling out before it hits $60 because speculators want to tighten up their profits," Gerard Burg, minerals and energy economist at National Australia Bank, told Reuters.

"But there is considerable opportunity to exceed $60 if there are supply disruptions."

Opec efforts

Opec sought to relieve the pressure on prices last week by lifting its daily production quotas by 500,000 barrels to 28 million barrels a day.

The oil producers' organisation also pledged a further similar rise if prices remained at their current level.

However, experts have questioned whether Opec's actions will have any impact because its members have already unofficially exceeded the threshold, pumping close to 30 million barrels a day.

Oil prices have shot up by more than 25% over the past month, having topped $50 a barrel for the first time last October.

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