* Oil hits record over $140 as Libya studies possible
output cut, weak dollar
* OPEC chief says oil could hit $170 in coming months
* U.S. House of Representatives calls on CFTC to
investigate market behavior
* Nigeria workers, Chevron to resume talks to avoid strike
(Updates prices; adds possible U.S. CFTC action)
By Matthew Robinson
NEW YORK, June 26 (Reuters) - Oil prices surged nearly 4
percent to a record over $140 a barrel on Thursday after Libya
said it was studying possible options to cut output in response
to potential U.S. actions against producer countries.
U.S. crude settled up $5.09 at $139.64 a barrel, after
hitting an all-time high of $140.39 earlier, eclipsing the
previous record of $139.89 a barrel hit on June 16. London
Brent crude settled up $5.50 at $139.83 a barrel.
After Thursday's settlement, prices fell more than $1 to
$138.61 on news that the U.S. House of Representatives directed
the Commodity Futures Trading Commission to use its authority,
including emergency powers, to "curb immediately" the role of
excessive speculation in energy futures markets. The Senate
must now take up the measure. []
Earlier, the record was hit largely on the news from
Libya.
"The crude oil market spiked sharply higher in early
trading after Libyan National Oil Company chief Shokri Ghanem
said that Libya was considering a production cut," said Tim
Evans of Citi Futures Perspective.
Ghanem, Libya's most senior oil official, said he was
studying the possibility of reducing production in response to
a bill before the U.S. Congress that would empower the Justice
Department to sue members of the Organization of Petroleum
Exporting Countries for limiting oil supplies.
"We are studying all the options," Ghanem told Reuters.
"There are threats from the Congress and they are taking OPEC
to court, extending the jurisdiction of the U.S. outside the
U.S."
Libya pumped about 1.71 million barrels per day (bpd) of
oil in May, according to a Reuters survey, out of total OPEC
output of 32.12 million bpd.
U.S. President George W. Bush has said he would veto the
legislation if it were passed by Congress. The House of
Representatives passed the bill in May, but the Senate has yet
to schedule a vote on the measure.
Oil prices have rallied over the past six years, supported
by surging demand from emerging economies like China.
U.S. crude prices stood at $70 a year ago.
Rising flows of cash into commodities from investors
seeking to hedge against inflation and the weak dollar have
added to gains this year.
The dollar fell broadly on Thursday after the Federal
Reserve held interest rates steady on Wednesday and dashed
expectations of an imminent rate hike.
ECONOMIC STRESS
Oil's gains helped push down U.S. stocks on Thursday, with
the Dow falling to its lowest level since September 2006 on
recession worries.
Rising fuel costs have strained economies and spurred
protests around the globe, prompting OPEC kingpin Saudi Arabia
to pledge to hike output during a meeting between producer and
consumer nations over the weekend.
OPEC President Chakib Khelil said in an interview Thursday
that prices could reach $170 a barrel in the coming months, and
he reiterated the cartel's position that speculation -- not a
supply problem -- was driving oil to new highs.
"I forecast prices probably between $150 and $170 during
this summer. That will perhaps ease towards the end of the
year," Khelil told France 24 television, according to a text of
the interview released by the station.
Oil prices fell on Wednesday after U.S. government data
showed a surprise build in the crude inventories of the world's
top consumer as demand continued to drop.
Nigerian oil workers met with Chevron management and the
OPEC country's oil minister on Thursday in an effort to avert
an all-out strike that could cut output.
(Additional reporting by Bernie Woodall in Los Angeles,
Robert Gibbons, and Gene Ramos in New York and Ikuko Kao and
Jane Merriman in London; Editing by Marguerita Choy)
