Oil futures surpassed a record US$67 a barrel in New York Friday to extend a startling rally fuelled by massive global demand and production problems at strained refineries, dealers said.
After reaching US$67.10 a barrel, the New York contract for light, sweet crude for delivery in September closed at US$66.86, up US$1.06 on Thursday's finish.
In London, the price of Brent North Sea crude oil for delivery in September gained US$1.07 to US$66.45 a barrel -- after hitting an all-time high of US$66.77.
PHOTO: AFP
New York futures have now rocketed by more than 160 percent since August 2002, when they stood at just US$25 a barrel. They have jumped at least 60 percent since August last year.
However, adjusted for inflation, they remain below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of US$80 a barrel in today's money.
"The petrol [gasoline] situation in the US is probably the most worrying factor at the moment, and it looks like it could be an ongoing problem because a shortage of refining capacity is not something that can be solved very quickly," Global Insight energy analyst Simon Wardell said.
Production shutdowns at strained US refineries are of particular concern for traders given strong gasoline demand during the US summer driving season.
On Thursday, problems were experienced at a ConocoPhillips facility in Wood River, Illinois. The 300,000-barrel-per-day facility is in preliminary restart mode, analysts said.
A 180,000 barrel-per-day unit in Memphis, Tennessee, was said to have suffered power failure, which typically takes up to a week to overcome.
BP's accident-prone Texas City refinery, the third-largest in the US, now has four units out of commission including one out of use since March 23, a spokesman said.
European oil prices were supported by news that BP's North Sea 120,000 barrel-per-day Schiehallion oil field is not expected to reopen until the end of the month, when repairs and testing are likely to have been completed.
"Any sign of refinery glitches, even if light and short-lived, entails some speculative buying because of the perception of supply disruptions," Refco analyst Marshall Steeves said.
Speculative pressure also accounted for the rise in Brent futures ahead of a long weekend in France, Italy and Spain, while trading activity stepped up ahead of Tuesday's contract expiry, Societe General analyst Deborah White said.
Looking ahead, she said her investment bank's strategists expect US futures to break through US$70 a barrel in the short term.
"The problem is that there is a new [refinery] problem even before the last one has been fixed," White said.
PFC Energy analyst Seth Kleinman said oil prices were expected to hit US$70 sooner rather than later, but he said that dealers were also aware of risks on the downside.
"Even within the bull run there could be a significant correction and dealers do not want to be caught out," he said.
In addition, traders have been fretting over developments in the oil-rich Middle East this week.
Saudi Arabia is on alert for possible terrorist attacks.
Iran, OPEC's second-biggest producer after Saudi Arabia, risks a showdown at the UN Security Council over its nuclear program.
The International Energy Agency meanwhile held steady its forecast for growth of overall demand at 1.60 million barrels per day this year and 1.78 million barrels next year.
The IEA allowed for an easing of apparent demand for oil in China, whose breakneck economic growth has done much to drive up oil prices, and a small upward adjustment for US demand.
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