Crude-oil prices jumped to a new high above $63 a barrel today, reflecting the market's persistent uneasiness about strong global demand and tight supplies.
WASHINGTON — Crude-oil prices jumped to a new high above $63 a barrel today, reflecting the market’s persistent uneasiness about strong global demand and tight supplies.
Traders pinned the latest rally on a wide-range of factors, including security concerns in Saudi Arabia, refinery snags in the United States and, to a lesser extent, attacks on pipelines in India. They also noted that U.S. gasoline demand continues to rise in spite of prices that average almost $2.30 a gallon.
Oil analyst Marshall Steeves at New York-based brokerage Refco Group Inc. said oil and gasoline prices were likely to keep rising until there were signs of a significant dropoff in demand, or a sharp slowdown in economic growth. “We’re clearly not there yet,” he said.
Light, sweet crude for September delivery rose to a high of $63.80 a barrel on the New York Mercantile Exchange before falling back a bit to $63.60, up $1.29.
Prices had settled at $62.31 a barrel on Friday, a record close for crude since Nymex trading began in 1983.
“The market clearly has the jitters,” said Deborah White, energy analyst at SG Securities in Paris.
Broadly speaking, those jitters are tied to the fact that worldwide consumption is expected to average more than 84 million barrels a day in 2005, leaving only about 1.5 million barrels a day of spare production capacity that could be called upon in an emergency to offset a prolonged supply disruption.
Given such a slim margin for error in the supply chain, a large premium has been priced into every barrel of oil sold on futures markets. This premium takes into account the possibility of production outages stemming from hurricanes, terrorism and labor strife around the globe.
Several factors put the market on edge Monday:
• The U.S. Embassy and consulates in Saudi Arabia were closed after authorities announced Sunday a security threat against U.S. government buildings inside the world’s largest petroleum-producing country.
• A fire broke out at a unit of Sunoco Inc.’s 330,000 barrels-a-day Philadelphia refinery over the weekend. This followed a string of refinery fires and other snags over the past two weeks that have not severely diminished supply, but have nonetheless made oil traders nervous.
• Suspected rebels launched renewed attacks overnight on pipelines in eastern India, leaving oil operations in the remote region in critical shape, a top oil official said Monday.
The market has also kept a close eye on tropical storms in the Gulf of Mexico, fearing a repeat of last year’s Hurricane Ivan, which damaged oil facilities and caused output in the region to drop for several months.
Oil broker Tom Bentz of New York-based BNP Paribas Commodity Futures said there was no single event on which Monday’s rally could be attributed. “We’ve just got a continuation of the uptrend here,” he said. “And there’s no sign that it will be stopping anytime soon.”
In other Nymex trading, gasoline futures gained 3.48 cents to $1.867 a gallon while heating oil rose 5.68 cents to $1.788 a gallon.
September Brent crude futures on London’s International Petroleum Exchange gained $1.14 to $63.45 a barrel, just off the record of $63.60.
Associated Press Writer Edith Balazs in Budapest, Hungary, contributed to this report.