In New York daytime trade on Tuesday, US crudes briefly hit the $29 mark, the highest price seen since the Gulf War in 1991, before ending the day at $28.85. The New York settlement was 83 cents higher from Friday. The New York market was closed on Monday for the Martin Luther King holiday.

The main factor underpinning prices was a recommendation on Friday by key members of the Organisation of Petroleum Exporting Countries (opec) that output curbs currently in place should continue even after the end March deadline. The recommendation was made by Opec's compliance committee which met in Vienna last week, and included oil ministers from Venezuela, Iran and Kuwait.

The committee's views reflected those of various other producers who in the last few months have called for an extension of the cuts to stabilise prices. Opec kingpin Saudi Arabia said earlier last week that output policy may be maintained possibly even for the rest of this year if market conditions remained as they were, although Venezuela's oil Minister Ali Rodriguez said he was uncertain if the extension could remain throughout the year.

Saudi Arabia and Venezuela together with non-Opec Mexico engineered the output cuts in March last year, aimed at slashing some five million barrels per day from global supplies. The output cuts have lifted the US crude prices sharply higher from the low of $10.35 hit in December 1998. On Friday, prices surged by more than $1.00 in response to the recommendations by the compliance committee.

Prices maintained their upward trend this week, amid projections of cold weather in the United States and expectations of lower Iraqi exports. Weather forecasts on Monday said the United States would likely experience a cold snap for another 10-12 days and possibly another week beyond that.

Price support also came from a report on Monday by the UN Secretary General Kofi Annan that without a marked acceleration in the approval of spare parts, Iraqi oil sales could fall by 2,00,000 BPD in the country's oil-for-food deal with the UN.