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06-20-2005, 10:27 AM
Oil prices hit new all-time high

Crude hovers near $60 a barrel amid gas-supply fears

Jeff Chiu / AP

Gasoline prices are displayed at a Shell gas station in San Francisco Friday. Crude oil prices surged to a record high near $60 a barrel Monday, sustaining a rally built on strong demand for gasoline and diesel and on concerns about refiners' ability to keep up.
MSNBC staff and news service reports
Updated: 11:55 a.m. ET June 20, 2005BUDAPEST, Hungary - Just as the peak summer driving season moves into high gear, crude oil prices continued to soar Monday, hitting a new intraday high near $60 a barrel.

Despite assurances by the Organization of Petroleum Exporting Countries just last week that it would raise its oil production target by half a million barrels per day, energy analysts remain concerned that demand for gasoline is continuing to outstrip supply, and that U.S. refineries may be unable to cope.

OPEC's president said Monday he would consult other member states on releasing an additional 500,000 barrels per day as early as this week.

“We have been expecting prices to come down for a while but this is clearly not the case. The rally is definitely sustained by gasoline demand in the United States posting a 3 percent yearly growth, which is seen as extremely strong,” said Deborah White, energy analyst with Barclays Capital in Paris.

“People are trying to push prices through $60,” she added.

The kidnapping last week of six oil workers, including two Germans, in OPEC-member Nigeria also contributed to the momentum.

Light sweet crude for July delivery gained 18 cents to $58.65 in moringin trading on the New York Mercantile Exchange. Earlier, crude oil futures hit a record intraday high of $59.23 a barrel.

Oil broker Mike Fitzpatrick at Fimat USA in New York said that any further action by OPEC this week may backfire. “If you add that additional half million barrels, people are going to be talking about OPEC having (production) capacity constraints,” he said.

Still, “it looks like we might have difficulty holding these levels. You’re seeing a great deal of reluctance among buyers to pay these higher prices,” he said.

In London, Brent crude for August delivery broke the $57.65 per barrel peak it reached last April to set a new high of $58.58 Monday on London’s International Petroleum Exchange. It later fell back to $58.13 a barrel, up 37 cents.

Oil workers in Norway, the world’s third-largest exporter, could begin a strike as soon as early Wednesday in a salary dispute that threatens to cut a third from the country’s daily output of 3 million barrels.

On Friday, crude climbed as high as $58.60 per barrel before settling at $58.47, an increase of $1.89 on the New York Mercantile Exchange. That topped the exchange’s previous intraday high of $58.28 set on April 4.

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.

“Bulls believe the only thing that can cool the market is an erosion in demand, but so far there are no signs of this,” said Energyintel analyst Matt Piotrowski. “They also focus on OPEC’s recent meeting as reinforcing the belief that the organization cannot cool prices.”

The Organization of Petroleum Exporting Countries failed to soothe the market last 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 cartel’s quota system, OPEC is pumping close to 30 million barrels a day, or about 35 percent of global demand.

CosmicPal
06-20-2005, 10:29 AM
I'd buy a horse before I became Amish.