NEW YORK (AP) - Oil prices surged as high as $86 a barrel Monday for the first time after OPEC said crude production by non-member countries is likely falling even as global demand for oil is rising. Prices were also supported by concerns that Turkish forces will pursue Kurdish rebels into Iraq, disrupting oil supplies, and by technical buying by investment funds.Despite the Organization of Petroleum Exporting Countries' decision last month to boost its production by 500,000 barrels per day beginning next month, the rest of the world will likely produce 110,000 fewer barrels of oil per day than expected in the fourth quarter, OPEC said in a report. At the same time, fourth quarter demand for crude oil will grow by 100,000 barrels a day over last year, OPEC said.
The estimates add to sentiment that crude supplies are tight. Last week, the Energy Department reported that domestic crude inventories fell during the week ended Oct. 5 when they had been expected to rise. And the International Energy Agency concluded that oil inventories held by the world's largest industrialized countries have fallen below a five-year average.
"The fact that U.S. crude inventories fell yet again ... reinforced the market's underlying concern that demand has yet to slow down sufficiently to allow stocks to build, while supply is also perceived to be struggling to catch up," wrote Edward Meir, an analyst at MF Global UK Ltd., in a research note.
Light, sweet crude for November delivery jumped $2.44 to settle at a record $86.13 a barrel on the New York Mercantile Exchange after rising as high as $86.22, a record trading price. Despite the gains, oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
In other Nymex trading, gasoline futures rose 7.24 cents to settle at $2.1575 a gallon, while heating oil futures rose 6.08 cents to $2.3072 a gallon. Nymex natural gas futures rose 47.1 cents to settle at $7.445 per 1,000 cubic feet on forecasts for cooler weather next week in the Northeast and Midwest, and on worries a storm in the Caribbean Sea will move north and gain strength, threatening key oil and gas infrastructure in the Gulf of Mexico.
In London, Brent crude futures rose $2.20 to settle at $82.75 a barrel on the ICE Futures exchange.
At the pump, gas prices fell 0.4 cent overnight to a national average of $2.757 a gallon, according to AAA and the Oil Price Information Service.