NEW YORK, 11 August 2005 — Oil prices surged nearly $2 a barrel yesterday after a US government report ignited concerns that strong demand and a spate of refinery problems could trigger a crunch in gasoline stockpiles.
US light sweet crude futures soared $1.93 to $65.00 a barrel, the highest on record. London Brent jumped $2.08 to new peak of $64.06 a barrel.
A US government report issued yesterday showed crude stockpiles in the world’s biggest energy consumer rose last week by 2.8 million barrels, due to hefty imports and slower refining activity.
But the report from the Energy Information Administration also showed a 2.1 million barrel decline in gasoline stockpiles due to strong demand and slower domestic production — bringing inventories 7.9 million barrels, or 3.7 percent, below last year’s level. “Gasoline inventories are of greater concern, but the draw was smaller than in previous weeks, and we don’t have that much time left in the driving season,” said Timothy Evans, senior analyst at IFR Energy Services.
US gasoline demand has been running at a robust 1.4 percent higher than a year ago over the past four weeks, despite record high retail prices at the pumps — a sign the economy is holding up against soaring energy costs. While crude prices are running at their highest on record in nominal terms, when adjusted for inflation they remain below their 1980 height over $82.
Crude oil producers and refiners have struggled to keep up with demand growth over the past two years, reducing the cushion of spare capacity needed to make up for any sudden shortfall.
OPEC producer nations, which control about 40 percent of the world’s oil exports, have been pumping at their highest levels in decades in an effort to cool prices.
Venezuela’s oil minister said yesterday the organization has done all it can to boost oil supply, but global prices will probably hold at their current levels. “We have said that this is a structural issue, not a short-term factor, and the price is going to stay the same,” Oil Minister Rafael Ramirez told reporters during a visit to Uruguay.
On Tuesday, OPEC President Ahmad Al-Fahd Al-Sabah of Kuwait blamed refinery bottlenecks for record oil prices.
Adding to gains yesterday, BP said its Schiehallion North Sea oil field would be down until the end of the month as it repairs fire damage. Unplanned closures and scheduled maintenance have cut around 10 percent of North Sea output in August.
In the United States, where refinery problems have pushed gasoline prices to historic highs, BP said it had shut a unit at its Texas City refinery. US gasoline futures struck a record yesterday of $1.8990 a gallon.