WASHINGTON, 18 June 2005 — Crude oil prices hit a new high above $58 a barrel yesterday, sustaining a rally built on strong demand for gasoline and diesel and on concerns about refiners’ ability to keep up.
“This is a pivotal point we’re at now,” said oil analyst John Kilduff of Fimat USA in New York. “We’re one hiccup away from $60.”
Light sweet crude for July delivery darted $2.02 higher to $58.60 a barrel in late afternoon trade on the New York Mercantile Exchange.
That topped the previous intraday high of $58.28 set on April 4 and the market was all but assured to close at a new high, at least in nominal terms.
While Nymex oil futures are more than 50 percent higher than a year ago, they are still well below the inflation-adjusted high above $90 a barrel set in 1980.
“The problem is not crude right now, there’s plenty of crude on the market,” said oil analyst Jamal Qureshi of Washington-based energy consultant PFC Energy, which estimates global oil demand is now slightly above 82 million barrels a day.
Still, the relatively small amount of surplus oil-production capacity is an important factor underlying the jitters on energy markets, keeping traders on edge about the possibility of output disruptions.
OPEC failed to soothe the market earlier this week when it agreed to raise its daily output quota to 28 million barrels a day because its members had already been unofficially exceeding that level.
Including Iraq, which is not bound by the 11-member group’s quota system, the Organization of Petroleum Exporting Countries is pumping close to 30 million barrels a day, or about 35 percent of global demand.
OPEC said it would consider another 500,000-barrel-per-day increase if prices don’t fall.
On London’s International Petroleum Exchange, Brent crude for August delivery rose 86 cents to $57.08 a barrel.
Gasoline futures climbed 4.47 cents to $1.6425 per gallon on Nymex, where heating oil futures rose 1.95 cents to $1.645 per gallon.
Oil prices had dropped below $47 a barrel in May as traders locked in profits from the prior run-up and as data pointed to slower economic growth and rising crude oil inventories around the globe. But the cooling off period didn’t last long and prices returned to their perch above $50 a barrel before the month was over.
