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Crude Oil Rally Pauses

Prices retreat after an initial spike following the murder of a top Iraqi official.
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Updated from 10:55 a.m. EDT

Oil futures were lower Monday, having hit another new record high in early trading, as supply worries were heightened after the head of Iraq's governing council was killed in a blast.

The benchmark U.S. crude was off 43 cents, or 1%, to $40.95 a barrel. The benchmark European crude, Brent North Sea, was down 26 cents, or 0.7%, to $37.60 in London trading. Gasoline futures, however, remained at a record high, gaining a fraction of one cent to $1.411 a gallon.

Both oil and gasoline futures bounced in early trading after the Iraqi official, Izzedine Salim, was killed in a car-bomb attack in Baghdad.

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U.S. oil prices last week closed above $41 a barrel for the first time ever on the New York Mercantile Exchange, surpassing the previous record high set in October 1990, when Iraq occupied Kuwait.

Prices have surged in recent weeks on worries about supply, following attacks on oil-producing facilities in the Middle East and an increase in seasonal demand as the peak summer driving season approaches.

Key OPEC producer Saudi Arabia has called on its fellow cartel members to increase production about 6% to help prevent any negative impact of world economic growth, but oil traders have shrugged off any possible impact because oil producers are already pumping more than their official quotas.

OPEC meets with representatives of oil-consuming nations later this week in Amsterdam.