June 21 (Bloomberg) -- Crude oil fell from a record in New York on speculation OPEC will raise its output quota for a sixth time in a year to bolster global stockpiles.

The Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world's oil, agreed on June 15 to raise its quota by 1.8 percent from July 1, and to consider doubling the increase if prices stay above $50 a barrel for seven days. Since then, oil has risen as high as $59.52 a barrel.

``The likelihood is that OPEC will soon come out with some talk about a further increase in quotas,'' said David Thurtell, a commodity strategist at Commonwealth Bank of Australia in Sydney.

Crude oil for July delivery fell for the first time in five days, by 61 cents, or 1 percent, to $58.76 in after-hours electronic trading on the New York Mercantile Exchange at 1:08 p.m. Singapore time.

Yesterday, the contract rose 90 cents, or 1.5 percent, to close at $59.37, the highest closing price since trading began in 1983.

Oil futures have gained 26 percent in the past month as rising trucking and aviation demand heightened concerns that refiners in the U.S., the world's biggest oil consumer, will strain to meet summer gasoline demand and store enough heating fuel for the northern hemisphere winter. Prices today are 56 percent higher than a year ago.

Actual Output

OPEC's agreement to raise its output limit by 500,000 barrels a day to 28 million barrels a day starting on July 1 is unlikely to boost actual output because OPEC already is delivering that amount, ministers from Iran, Venezuela and Kuwait said last week.

OPEC's 10 members with quotas, all except Iraq, last month produced 28.1 million barrels a day, Bloomberg data shows.

The only OPEC producer with significant spare capacity, Saudi Arabia, is willing to boost exports if customers for its surplus oil, mostly heavy or medium grade, can be found, Saudi Arabian Oil Minister Ali al-Naimi said June 14. Non-OPEC exporters such as Russia, Norway and Mexico are producing at maximum capacity.

The drop in prices was probably compounded by the expiry of the July contract at the end of trading today, Commonwealth's Thurtell said. The more actively traded August contract reached $60.02 yesterday, before closing at $59.88. It was at $59.25 in after-hours trading. The September contract reached $60.65 yesterday.

July

``Most people are out of July already,'' said Steve Taylor, a trader with New West Petroleum Inc. in Sacramento, California. ``We're at $60 from August.''

World fuel demand will reach 85.9 million barrels a day in the fourth quarter, 150,000 barrels more than forecast a month earlier, the Organization of Petroleum Exporting Countries said last week.

U.S. crude oil prices will stay in the high $50s during the next 12 months as supply bottlenecks and a robust global economy keep commodity prices high, Merrill Lynch & Co.'s senior energy strategist said yesterday. West Texas Intermediate crude oil, the U.S. benchmark, will average $56.75 in the third quarter and $58.50 a barrel in the fourth, Merrill said in an e-mail report.

``Strong physical demand growth has put further pressure on a strained global commodity supply chain,'' Francisco Blanch, Merrill's strategist in London, wrote in a report.

Prices have gained partly because of China's ``voracious'' demand, Commonwealth Bank's Thurtell said in an interview.

``Other regions are growing quite strongly,'' he said. ``China is an important part, not the only part. Fundamentals are very, very tight at the moment. The market is fundamentally driven.''

U.S. crude oil inventories have fallen in three of the past five weeks from a six-year high. The 329 million barrels held on June 10 is 7.7 percent more than the five-year average for the period.

Spare Capacity

``There isn't much spare capacity,'' said Joseph Allman, an analyst with RBC Capital Markets in Houston. ``Despite high prices demand remains strong. U.S. demand for gasoline and diesel is rising.''

U.S. demand for distillate, including diesel, heating oil and jet fuel, in the four weeks ended June 10 was 6.5 percent higher than a year earlier, the Energy Department said last week. Gasoline demand rose 3 percent.

Distillate stockpiles have risen four straight weeks to 110.2 million barrels on June 10, 1.7 percent less than the five- year average for the period.

Those inventories probably gained another 2 million barrels last week, according to the median forecast from the Bloomberg analyst survey. Gasoline supplies, 2.3 percent above the five- year average, probably gained another 125,000 barrels last week.

Speculators

Long positions held by hedge funds and other speculators, or bets that oil prices will rise, exceeded shorts by 12,563 contracts in the week ended June 14, according to the Commodity Futures Trading Commission. It was more than nine times the number of net-long positions the previous week.

``Inventory levels don't support these prices,'' said Michael Fitzpatrick, vice president of energy risk management at Fimat USA in New York.

``The CFTC report shows that speculators are making big bets that prices will rise,'' he said. ``There will come a point where they exit the market and you will get a dramatic correction.''

To contact the reporters on this story: Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net

Last Updated: June 21, 2005 01:13 EDT