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THE NEW YORK TIMES: Oil Prices Settle at Record Near $60: “Analysts said the bullish momentum was supported mainly by talk of several minor refinery snags in California, including an outage at Shell's Martinez plant, fueling fears of supply disruptions at the start of the high-demand summer driving season.”: Posted Saturday 25 June 2005

 

By THE ASSOCIATED PRESS

 

VIENNA, Austria (AP) -- Crude oil futures settled at a record near $60 a barrel Friday as prices rose on speculative buying and fears of supply disruptions due to refinery glitches.

 

Analysts said the bullish momentum was supported mainly by talk of several minor refinery snags in California, including an outage at Shell's Martinez plant, fueling fears of supply disruptions at the start of the high-demand summer driving season. OPEC suggestions that it was willing to hike output left markets unimpressed, they said.

 

After climbing as high as $60 a barrel for the second straight day, light, sweet crude for August settled at $59.84, an increase of 42 cents on the New York Mercantile Exchange. It was a record close on Nymex, where oil futures have been traded since 1983.

 

Heating oil futures fell 2.52 cents to $1.6504 per gallon, while gasoline futures fell less than a penny to $1.6557 per gallon.

 

On London's International Petroleum Exchange, Brent crude futures for August delivery rose 40 cents to settle at $58.40 a barrel.

 

Oil prices are nearly 60 percent higher than a year ago, though still below the inflation-adjusted high above $90 a barrel set in 1980.

 

''It's hard to find sellers in the market. ... Bids are outnumbering offers,'' said Ken Hasegawa, a broker at Tokyo-based Himawari CX.

 

It was not the first time the August crude contract hit the $60 a barrel level -- that happened back on April 4, when prices hit $60.02. But it is significant because August is now the front month contract, meaning it is the next to expire and is generally the most actively traded.

 

The July contract expired Tuesday.

 

Analyst Daniel Hynes at ANZ Bank in Melbourne, Australia, said the rise has ''almost purely been built on supply disruption fears.'' PVM Oil Associates in Vienna, Austria, touched on the same theme, saying the bullish trend was due to ''strong demand and against a background of capacity tightness.''

 

Any glitch in the aging U.S. refining system puts more strain on the global supply chain because its refining capacity is running at maximized levels, making the world's largest energy consumer reliant on imports of gasoline. The logjam in the production line is contributing to the build in petroleum products in America, analysts say.

 

Also, there is little excess production capacity to buffer the market from any prolonged output disruption. Excess production capacity is estimated to be about 1.5 million barrels a day.

 

As global demand stays strong, and populous countries such as China and India increase their consumption of energy, there are fears the producers will not be able to meet escalating demand as the second half of 2005 kicks in.

 

China imported 10.4 million metric tons of crude oil in May, or an average of 2.46 million barrels a day, up 8.2 percent from a year ago, data issued Friday by the General Administration of Customs showed.

 

Still, with all these factors in the mix, analysts said the market was less affected by any significant loss of supply or sign of a demand surge than it was by speculation.

 

Japan's Economy Minister Heizo Takenaka said Friday Tokyo will continue to monitor oil prices closely to see if the current surge is part of a long-term trend that could be a potential risk for Japan, the world's No. 1 oil importer.

 

''Oil prices in the mid- to long-term are a risk factor for the economy. We must closely monitor their moves,'' he told a news conference.

 

Associated Press Writers Mari Yamaguchi in Tokyo and Gillian Wong in Singapore contributed to this report.

 

http://www.nytimes.com/aponline/business/AP-Oil-Prices.html

 

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