US oil prices stayed near 13-year highs yesterday, edging up towards US$40 a barrel as traders remain wary of a possible sabotage attack on oil facilities in the volatile Middle East, home to two-thirds of global reserves.
US gasoline futures also sailed to a new record high despite a bigger-than-forecast rise in American inventories of the fuel as worries lingered that supplies will prove insufficient during the peak demand summer months.
US light crude peaked at US$39.78 a barrel during the Asian trading day, the highest level since February last year, when prices hit US$39.99 in the run up to the US-led invasion of Iraq.
"I think we're going to have a four in front of the oil price very soon. It's certainly pretty ugly for the oil consumers of the world," said David Thurtell, commodities strategist at Commonwealth Bank of Australia in Sydney.
Worries over stable supplies from the Middle East, low stocks of gasoline in the US and soaring demand in China have driven US crude prices toward the all-time record at US$41.15 reached in October 1990 after Iraq invaded Kuwait in the crisis that led to the first Gulf War.
Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, forecast that crude was likely to push up to US$43 to US$45 a barrel by mid-year.
"Last year we hit US$39.99 before the war, which was largely psychological. Now we need to look at the fundamentals and they are very strong," Emori said.
Prices have surged more than 6 percent this week. Traders worry that the weekend shootings at a Saudi Arabian chemicals plant and attempts a week earlier to bomb Iraq's key Basra oil export terminal were precursors to a bigger attack on vital oil facilities in the Middle East, which pumps about one-third of global daily crude output.
US gasoline futures also set a new record at US$1.3205 a gallon, finding little comfort from fresh data showing that American inventories of motor fuel rose by four million barrels in the week to April 30, more than double expectations of a 1.7-million-barrel rise.
Despite the increase, American gasoline stocks remain 3.3 million barrels under levels at the same time last year and 5.6 million barrels below the five-year average for this time of year.
"Gasoline levels are still below comfortable levels. It only needs a little trouble at one or two refineries during summer and there could be a problem with supplies," a broker said.
US gasoline consumption hits a peak in the months between the end of May and September and is used as a barometer for overall demand in the world's biggest oil user.