Crude oil rose to $41 a barrel for the first time in more than 13 years at the New York Mercantile Exchange as high demand for U.S. fuel amid decreasing inventories spurred speculative buying, Reuters reported.

Light crude futures hit an all-time high of $41.15 Oct. 10, 1990, two months after Iraq invaded Kuwait and amid the buildup to the first Gulf War.

The break above $40 for U.S. crude is now in its third day. If dealers get comfortable with prices at those heights, there could be an extended run of high-priced oil, Paul Horsnell of Barclays Capital said.

"This is not a spike in the oil price due to a single factor," Horsnell said. "Indeed, given the erosion in spare oil production capacity, the loss of flexibility in first the United States and now increasingly global refining and the massive destabilization that has been created in the Middle East, $40 no longer looks at all outrageous."

World oil demand is proving far stronger than expected, thanks to booming economic growth, the International Energy Agency said Wednesday. It said incremental fuel consumption this year looked set to outpace growth in every year since 1988.

Other analysts think prices are far above levels justified by supply-demand fundamentals and are overdue for a downward correction.

"The Saudis have told customers there will be more oil; I don't know what else you need," David Thurtell, commodities strategist at Commonwealth Bank of Australia, told Reuters.

"Gasoline stocks are on the low side of what is seen as comfortable, but they're not critically low. Fundamentally, people definitely underestimated demand and the market is tighter than expected, but not $40 tight."

Meanwhile, OPEC will decide output policy June 3 in Beirut after discussing other options at a forum for petroleum producer and consumer nations in Amsterdam May 22-24.