With its output already near a 25-year high, the Organization of Petroleum Exporting Countries is stretched to meet rapidly rising demand but is considering a second output increase following one agreed to this week in light of the rising prices, Reuters reported.
OPEC members meeting in Iran on Wednesday agreed to boost the group's output quota by 500,000 barrels a day, or 1.9 percent.
OPEC President Sheik Ahmed Fahd al-Ahmed al-Sabah said ministers might start telephone consultations as early as next week about increasing production another 500,000 barrels if prices do not ease, according to the Associated Press.
"As OPEC, we will continue to watch the market closely," he said. "We believe that if prices stay as they are in the next seven to 10 days, we will start contacting minister colleagues to discuss the other 500,000 (barrels a day) that the president has the authority (to decide on) after consultations."
On Thursday, light sweet crude for April delivery rose 29 cents to $56.75 a barrel in afternoon Nymex trade, retreating from a high of $57.50.
While the price of oil is more than 50 percent higher than a year ago, crude futures would have to climb above $90 a barrel to approach the all-time inflation-adjusted high set in 1980, according to the AP.
"I don't see anything than can take this thing down," said Michael Guido, director of commodity strategy in New York for Societe Generale, reported the AP. He said the fear of a supply problem, not an actual supply problem, is driving the market psychology.
If the economy took a turn for the worse, signaling a drop in energy demand, then prices might fall, he said.
But economic forecasters are not predicting a downturn.
"People are not rationing their gasoline expenditures or rationing their driving," said Smith Barney economist Steve Wieting, who added he believes the U.S. economy will continue to grow at a healthy clip of 4 percent in 2005, quoted the AP.