Oil leapt to an all-time high above $81 a barrel on Tuesday, drawing strength from concerns about a winter supply squeeze in top consumer the United States, where an anticipated interest rate cut is calming recession fears.
Hurricane and other supply risks, tightening U.S. fuel inventories and fund flows into energy from poorly performing equity markets have fuelled oil's rally -- which has taken U.S. crude to new record highs for five consecutive trading sessions.
U.S. crude was up 7 cents to $80.64 a barrel by 0911 GMT after hitting a record peak of $81.24 and following a $1.47 jump on Monday. London Brent crude was off 17 cents at $76.81 a barrel.
"The market developed a momentum of its own when price movement coincided with tightness in the market," said David Moore, commodities strategist Commonwealth Bank of Australia.
"In such a tight market there is potential for it to go up quite sharply without any major new news, but I actually expect some profit-taking at these levels to around $80," he added.
The U.S. Federal Reserve is expected to trim rates by at least 25 basis points on Tuesday to prevent a credit squeeze from pulling the economy into a recession, which analysts say would dampen oil demand.
The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, shares that view. But its agreement last week to boost output by 500,000 barrels per day from November has done little to soothe concerns of fuel shortages this winter.
Some OPEC members say the exporters may have to pump more if oil stays above $80 for long. U.S. crude has climbed 33 percent this year.
"If the high price lasts say more than 15 to 20 days there would at least be consultations between ministers. They'd have to do something about it," an OPEC source told Reuters.
(Reuters)