* Oil hits record over $140 as Libya studies possible
output cut, weak dollar
* OPEC chief says oil could hit $170 in coming months
* Nigeria workers, Chevron to resume talks to avoid strike
(Updates first paragraph, prices to reflect new record)
By Matthew Robinson
NEW YORK, June 26 (Reuters) - Oil prices surged to a record
over $140 a barrel on Thursday after Libya said it was studying
options to cut output in response to possible U.S. actions
against producer countries.
U.S. crude <CLc1> rose $5.50 to $140.05 a barrel by 2:22
p.m. EDT (1822 GMT), passing the record of $139.89 a barrel
struck on June 16. London Brent crude <LCOc1> traded up $5.33
to $139.66 a barrel.
"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." []
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 and
India.
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. []
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.
"I think that the devaluation of the dollar against the
euro, if everything goes as I think it will, will be of the
order of perhaps 1 to 2 percent, and this will probably
generate an $8 rise in the price of oil," he said.
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.
A Nigerian oil workers union and Chevron <CVX.N> were
expected to resume talks on Thursday in a last-ditch effort to
avert an all-out strike that could sharply cut output from the
OPEC nation.
Separately, pipeline attacks cut Chevron's Nigerian output
of around 350,000 barrels per day by a third last week.
(Reporting by Matthew Robinson, Robert Gibbons, and Gene Ramos
in New York; Ikuko Kao and Jane Merriman in London; editing by
Jim Marshall)
