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Crude oil futures settle above US$62

Crude oil prices settled above US$62 a barrel on Friday, rallying on concerns about refinery snags and following the release of a positive US jobs report.

The rally strengthened late in the session, as fresh news headlines and market rumors about trouble at several US refineries added to worries about refiners ability to meet summer fuel demand.

Light, sweet crude oil for September delivery rose US$0.93 to close at US$62.31 a barrel on the New York Mercantile Exchange.

"We continue to see a bunch of headlines on outages and failed restarts at refineries. The refinery outages are spooking the gasoline market, and that's spilling over into the rest of the complex," a trader in the New York Mercantile Exchange gasoline pit told Dow Jones Newswires.

In earlier trading, the September crude contract jumped US$1.07 to an intraday high of US$62.45 a barrel, just US$0.05 shy of the record hit on Wednesday.

A breach of the record high of US$62.50 is a matter of time, said Chris McCormack, a technical analyst and broker at ABN Amro.

It could come "by Monday or Tuesday at the latest," he said, a move that could send the front month contract as high as US$63.40 or US$65.30 "at a minimum."

The September gasoline contract rose more than US$0.03 to an intraday high of US$1.8345 a gallon, closing on the record high of US$1.86 a gallon reached last month.

September heating oil was up US$0.0252 at US$1.7330 a gallon.

The number of refinery outages that have lifted gasoline futures more than 10 percent in past two weeks continued to grow. Among the latest, a mechanical failure on Thursday reportedly forced Motiva to shut a cat cracker at its 115,000-barrels-a-day refinery in Norco, Louisiana.

The exact extent of the refinery troubles isn't known. But Barclays Capital estimates that the outages have cut at some 3 percent of US refining capacity at a time when refiners should be running flat out to meet peak summer driving demand.

Phil Flynn, an analyst at Alaron Trading Corp added that strong US payrolls data released on Friday is also bullish for prices because they "seem to suggest that consumers will be able to continue to use energy at a record pace."

The US Labor Department reported on Friday that US nonfarm payrolls grew by 207,000 in July, the biggest increase in three months.

OPEC has increased its production by 300,000 barrels a day in the last two weeks to around 30.4 million barrels daily in an attempt to cool surging oil prices, the cartel's president said.

Sheik Ahmed Fahd Al Ahmed Al Sabah, who is also Kuwait's energy minister, said in remarks carried by the Kuwait News Agency on Friday that the market had begun returning to normal and "prices [have] started to fall, especially after the smooth transition of power," in Saudi Arabia. He was referring to the investiture of King Abdullah, after the death of King Fahd on Monday.

The kingdom is the world's largest oil producer and exporter.
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