Crude oil prices flirted with new highs on Monday as the market shrugged off news of higher output from Saudi Arabia, traders said.

New York's main oil futures contract, light sweet crude for June delivery, closed at a record 127.05 dollars a barrel, a gain of 76 cents from Friday's close.

Earlier the benchmark futures contract hit an intraday high of 127.28 dollars, just short of its all-time peak of 127.82 dollars, struck on Friday.

In London, Brent crude contract for June rose seven cents to settle at 125.06 dollars a barrel, after spiking to 126 dollars. It hit a record 126.34 dollars Friday.

"We continue to see record highs posted on a daily basis as the bull run continues," MF Global senior energy broker Rob Laughlin said Monday. "It feels as though we're likely to see more of the same."

Amid rocketing prices, Saudi Arabia has boosted oil output by 300 000 barrels per day to meet demand and compensate for lower output from other producers, Saudi Oil Minister Ali al-Nuaimi said on Friday.

However US President George W. Bush said the hike would not solve American energy problems. Soaring prices of crude oil are adding inflationary pressures to an already weak US economy.

Saudi Arabia, the world's biggest producer of crude, said that by June it would be producing 9.45-million barrels of oil per day.

Nuaimi reiterated Opec's long-standing view that global oil supply was balanced with demand.

Saudi Arabia is the largest oil producer in the 13-nation Organization of the Petroleum Exporting Countries, which pumps 40 percent of the world's oil.

Slower economic momentum

Last week, Opec trimmed its 2008 estimate of world oil demand growth, citing higher prices and slower economic momentum in major industrialized countries including the United States.

Oil prices have risen by more than a quarter since the start of 2008, when they surged past 100 dollars a barrel for the first time.

In its latest monthly report published on Monday, the independent Centre for Global Energy Studies said that oil prices would continue to rise unless there was a worldwide recession.

"When they start to fall, the drop is likely to be steep," it warned.

Crude futures are being supported by supply disruptions in oil-producing nations, notably Nigeria, high demand for energy by China ahead of the Summer Olympics in Beijing and a weak US currency which makes dollar-priced oil relatively cheaper for buyers using other currencies.

Goldman Sachs, the most active investment bank in energy markets, last week predicted that oil prices would jump to 141 dollars during the second half of 2008.

AFP