Crude oil prices soared to new highs yesterday, climbing past US$66 a barrel as reports of new US refinery outages rekindled fears that gasoline supplies in the world's biggest consumer would have to struggle to meet the rising demand.
A spate of refinery glitches, an unusually active hurricane season in the US and concerns over Iran's decision to resume uranium conversion activities have weighed heavily on people's minds, pushing prices upward, analysts said.
With bullish sentiment unabated and crude prices hitting five consecutive highs in just as many days this week, analysts expect front-month crude contracts to test the US$70 a barrel threshold.
PHOTO: AP
Light, sweet crude for September delivery rose 28 cents to US$66.08 on the New York Mercantile Exchange, after hitting a new high at US$66.13 a barrel in earlier trading.
Gasoline rose nearly a cent to US$1.9565 a gallon (3.8 liters) while heating oil rose over half a cent to US$1.9042.
In London, Brent crude for September delivery was trading at US$65.76 a barrel, up 38 cents.
Analysts have said that gasoline demand, currently at its peak in the US summer driving season, was driving crude's gains.
Last week, US gasoline demand picked up by 1.4 percent from a year ago, according to government data.
Coupled with new reports of refinery outages this week, traders fear that US refiners, already running at near-maximized capacities, are straining to satisfy the rising demand.
"People fear that there won't be enough gasoline at a time when it's so greatly demanded, so they're just buying, buying and buying," said Tetsu Emori, who is the chief commodities strategist at Mitsui Bussan Futures in Tokyo, Japan.
Oil prices are almost 50 percent higher than they were a year ago, but they would need to surpass US$90 a barrel in order to exceed the inflation-adjusted peak set in 1980.
The US Energy Department said on Wednesday that gasoline inventories fell 2.1 million barrels to 203.1 million last week.
"The refinery breakdowns are a big issue, they're happening at a time when gasoline supplies are already very tight," Emori said.
Among the latest refinery outages: several units at ConocoPhillips' 306,000 barrel-a-day Wood River, Illinois, refinery were shut after a thunderstorm caused a power failure at the plant.
Also, BP PLC shut down a hydrogen recovery unit Aug. 10 at its massive 470,000 barrel-a-day Texas City refinery, following a decision by the company to keep high-pressure units off line until they can be proven safe, BP Spokesman Scott Dean said on Thursday.
The three other high-pressure units at the refinery -- the residual hydrotreater, the ultracracker and the gas oil hydrotreater -- were already off line Wednesday.
The other units will be kept down pending investigations, Dean said.
The incidents are the latest in a string of outages that have hit about a dozen US refineries that together can process 2.7 million barrels a day of crude oil, some 16 percent of total US refining capacity.
Analysts said that traders have been focusing selectively on information that would send prices higher.
Traders appeared to discount a downward revision in oil demand that was forecast by the International Energy Agency and released on Thursday.
The group's monthly report projected that demand would be 150,000 barrels a day less then it expected, as demand from China appears to show signs of weakening.
Instead, the focus seemed to be on sections of the report that reduced its estimate of output by Russia and other nonmembers of the Organization of Petroleum Exporting Countries, analysts said.
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