WASHINGTON - Oil prices surged to a new high Monday, settling at $41.72 per barrel as traders shrugged off Saudi Arabia's pledge to sharply boost production one week ahead of the busy summer driving season.
The Energy Department, meanwhile, reported that the average retail price of gasoline nationwide soared 4.7 cents last week to $2.064 per gallon - also a record.
AAA Auto Club listed the average price of a gallon of unleaded regular gasoline nationwide as $2.033 on Monday, while the average price in Florida was $2.013 and in the Tampa Bay area was $1.968.
Energy prices are seen as a threat to the global economic recovery, taking discretionary income out of consumers' wallets and burdening certain industries, most notably the transportation sector, with high operating costs.
Saudi Arabia, the world's largest oil producer, announced late last week that it intends to boost crude output to 9-million barrels a day beginning in June in an effort to moderate high prices, which it considers harmful over the long term because it could sap demand. That drove the price of oil below $40 on Friday.
But with other Organization of Petroleum Exporting Countries members reluctant over the weekend to publicly support Saudi Arabia's proposal to raise the cartel's daily production quota by more than 2-million barrels, prices lurched above $40 again Monday.
Light crude oil for July delivery rose $1.79 a barrel, or 4 percent, on the New York Mercantile Exchange, passing the previous high of $41.55 set a week ago. Gasoline futures also rose, finishing 4.1 cents higher at $1.4578 per gallon.
Analysts said the fundamentals of supply and demand are not as bad as current oil and gasoline prices would suggest.
But the combination of tight refining capacity in the United States, strong demand from China and fears that terror attacks could disrupt the global oil supply chain have given traders and speculators plenty of fodder to push prices higher, analysts said.
"We believe fundamentals support prices in the low $30 range," said Lawrence Goldstein, president of the Petroleum Industry Research Foundation in New York.
Over the weekend Saudi Arabia said it was willing to add 2-million barrels of oil per day to the market, on its own, in order to keep the global economy on track.
While OPEC did not act on the Saudi proposal to raise the output quota over the weekend, when members met informally at an energy conference in Amsterdam, analysts said the cartel could authorize a production increase when it meets June 3 in Beirut.
Seth Kleinman, an analyst at PFC Energy in Washington, predicted that other OPEC members likely would raise the group's production quota since Saudi Arabia appears prepared to take matters into its own hands anyway.
"They may as well certify it. Otherwise it makes them look impotent," Kleinman said.
