Oil prices briefly surpassed $55 a barrel yesterday and settled at their highest level since late October.
The recent rally -- crude futures are up more than $10 since the year began -- reflects concerns that the world's petroleum supply is being stretched thin by strong economic growth, though some traders are nevertheless stunned by the commodity's rapid advance.
With gasoline futures also rising, analysts said consumers should expect the average pump price, now $1.93 per gallon, to climb.
The weak dollar and the apparent unwillingness of the Organization of Petroleum Exporting Countries to pump more oil have contributed to the latest runup in crude futures, which are now 52 percent above year-ago levels. However, analysts and brokers say speculative buying by hedge funds and others is magnifying the move.
''About the only way to explain this rally in the market is fund buying," said James Cordier, president of Liberty Trading Group in St. Petersburg, Fla. ''They're pushing the market higher while producing nations are sitting on their hands and smiling ear to ear. This is incredible."
Analysts said that while crude futures could certainly rise further they do not expect prices to remain at these heights for very long. Eventually, producers and refiners seeking to lock in future profits -- and speculators looking to cash in -- will sell into the market, they said.
That said, with the spring and summer driving season approaching, analysts believe prices will remain well above $40 a barrel in the months ahead.
After climbing as high as $55.20 a barrel, light, sweet crude for April delivery settled at $53.57 on the New York Mercantile Exchange, an increase of 52 cents. The record close set on Nymex last October was $55.17, though prices would have to surpass $90 per barrel to meet the inflation-adjusted peak set in 1980.
In London, Brent crude futures rose 73 cents to $51.95 on the International Petroleum Exchange, retreating from intraday highs above $52 a barrel.
In other Nymex trading, gasoline futures rose 2.37 cents to $1.5075 per gallon. That followed an 8-cent rise the day before.
''This is especially bad news for consumers, given the fact that gasoline prices have risen from early March to the middle of May in 19 of the last 20 years," said energy analyst Peter Beutel of Cameron Hanover Inc.
The case made in support of high oil prices rests on the belief that growth in demand, particularly in China but also in the United States, is being underestimated by economists. This miscalculation, some say, comes as producers are having difficulty serving the world's 84-million-barrel-a-day oil habit, and maintaining a supply cushion in the event of a disruption.