Crude oil futures climbed 3 percent to settle above US$55 a barrel on Friday as traders' supply fears were bolstered by a US Energy Department official who predicted new record highs for oil prices because of "paltry" domestic inventory levels.
Analysts have noted a variety of factors putting upward pressure on oil prices in recent days -- from US refinery snags to the hospitalization of Saudi Arabia's King Fahd -- though the most prominent has been concern that as refiners strive to meet today's strong demand for gasoline and diesel, they could end up having difficulty producing enough heating oil later in the year.
As a result, heating oil futures have surged more than 10 percent in the past week, climbing US$0.0573 to US$1.5595 a gallon on Friday on the New York Mercantile Exchange.
John Cook, director of the petroleum division at the agency's Energy Information Administration, helped justify the oil market's nervousness, telling Dow Jones Newswires "I think we'll see new records, not necessarily by much, but I think we may even average US$60 for a month."
"The demand growth is going to be there, and the inventory surpluses we have are pretty paltry to begin with and they are going to disappear," Cook was quoted as saying.
Light sweet crude for July delivery climbed US$1.40 to US$55.03 a barrel on Friday on Nymex, rising eight out of the nine past trading sessions. On Thursday, prices finished US$0.97 lower at US$53.63. Gasoline futures increased by US$0.0417 to US$1.5571 per gallon.
In London, Brent crude rose US$1.77 to settle at US$54.17 per barrel on the International Petroleum Exchange.
Oil analyst Tim Evans of IFR Energy Services in New York said he considered Cook's comments to be irresponsible, given the climate of fear already permeating the market.
"He's acting more like a cheerleader for the rally than he is an analyst, or a keeper of the numbers," said Evans, whose own analysis has led him to conclude that hype and speculation -- not genuinely tight supplies -- have pushed oil prices to record levels.
"There is this ingrained belief that even if the market's not tight today, it's going to be tomorrow," Evans said.
But broker Tom Bentz of BNP Paribas Commodity Futures in New York said Cook's comments merely confirmed what many traders have been saying for months. Still, Bentz said he was "a little surprised that he would make those comments ... It just sparks fear."
On Thursday, the EIA said inventories of crude oil rose last week by 1.4 million barrels to 333.8 million barrels, or 11 percent above last year, while gasoline inventories grew by 1.3 million barrels to 216.7 million barrels, up 6 percent from a year ago.
But distillate fuel supplies rose by only 700,000 barrels to 106.4 million barrels, or roughly equal to year-ago levels. That added to worries that there might not be enough heating oil and diesel output for the next winter season in the Northern Hemisphere.