(Agencies)
Updated: 2008-02-29 19:02

Shum warned of the possibility of a sharp correction at some point, though unlikely in the near term.

"Right now, there's a lot of trading based on emotion - emotions are high and that could keep crude oil at elevated levels, but the market faces the risk of a price collapse."

The Japanese government on Friday urged the oil cartel OPEC to increase output to help ease record prices.

"The high crude prices are gradually damaging the global economy. This will damage the economies of oil-producing countries," Minister of Economy, Trade and Industry Akira Amari said.

The Organization of Petroleum Exporting Countries holds its next policy meeting on March 5. It is likely to decide to keep current production levels unchanged, or even cut production, according to reported comments by OPEC President Chakib Khelil.

Khelil noted that oil inventories were growing, and that the recent rally in oil prices has been driven by the US dollar's weakness and speculative trades amid geopolitical risks.

Crude prices are within the range of inflation-adjusted highs set in early 1980. A $38 barrel of oil then would be worth $97 to $104 or more today, depending on the how the adjustment is calculated. A direct comparison with daily Nymex prices is difficult because historical data, gathered before the crude futures contract was created in 1983, are based on average monthly prices posted by oil producers.

In other Nymex trading, heating oil rose 0.82 cent to $2.8538 a gallon while natural gas futures added 0.1 cent to $9.444 per 1,000 cubic feet.

In London, Brent crude futures rose 9 cents to $100.99 a barrel on the ICE Futures exchange.

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