Oil prices near record high
(CNN) -- Oil prices have climbed above $40 for the first time in 13 years as markets remain concerned over tight supplies.
In New York, U.S. light crude closed Wednesday at $40.77 per barrel.
That is within sight of the record high for crude futures of $41.15, reached in October 1990 after Iraq invaded Kuwait.
The benchmark Brent North Sea crude oil for June delivery rose 11 cents to $37.47 per barrel in early London trading Wednesday before closing at $37.32.
The price spike came on the same day that the U.S. Energy Information Administration (EIA) predicted the average cost of gas in the United States would reach $2.03 for a gallon of self-serve regular in June.
That's up from a peak of $1.82 that was projected last month.
The EIA is the statistical branch of the U.S. Department of Energy.
"With oil (prices) above $40 it's going to put a cap on growth for the time being, and with the geopolitical situation the way it is I can't see the market making much headway,'' one dealer told Reuters.
Also Wednesday, the International Energy Agency (IEA) said rapid global economic expansion is fueling the biggest increase in world oil demand growth for 16 years. (Full story)
The Paris-based IEA raised its forecast for incremental oil demand in 2004 by 270,000 barrels a day (bpd) to 1.95 million bpd on the 80.6 million bpd world market.
Global oil prices have been on a rollercoaster ride this week.
On Monday, the price of crude fell $1 after Saudi Arabia called on the Organization of the Petroleum Exporting Countries to raise output limits by 1.5 million bpd to cool down red-hot prices, which have surged 20 percent this year. (Full story)
But the market bounced back to highs not seen since just before the first Gulf War on doubts that the OPEC increase would tip the supply-demand balance in an already constricted market.
OPEC has been pumping 1.5 million to 2.0 million bpd above its official production ceiling of 23.5 million bpd since it agreed to cut supply by one million bpd from April 1.
Members of the cartel are scheduled to meet June 3 in Beirut to discuss output levels. However, OPEC ministers may decide to meet ahead of a regular gathering of the International Energy Forum on May 22 in Amsterdam.
"OPEC knows that all high oil prices do is damage economies and asset markets, and with them the demand for oil, while encouraging development of competing oil resources. The market should come to its senses soon and will come down in the next couple of months,'' David Thurtell, commodities strategist at Commonwealth Bank of Australia in Sydney, told Reuters.
Meanwhile, rising oil prices have prompted some major airlines to impose fuel surcharges to ticket prices. (Full story)
British Airlines said Tuesday it would impose a per flight surcharge of £2.50 ($4.44) effective from May 13.
The announcement came on the same day Australia's biggest airline, Qantas, said it would add between A$6 (US$4) and A$15 to tickets.
German airline Lufthansa also added a fuel surcharge for its cargo business this week, while Scandinavian airline SAS also said it was looking at its prices.
