Oil tops $145 due to concerns on supply
DALLAS - Crude oil rose above $145 a barrel to a record amid signs global demand for fuels, particularly from China, may strain supplies.
PetroChina Co. may import record volumes of petroleum products this year for reconstruction after an earthquake, China National Petroleum Corp. said Saturday, and to prepare for the Olympics. Heating oil futures, a proxy for distillate fuels including diesel, rose to a record yesterday.
"There's a kind of expectation in the market that there will be strong ongoing demand for distillate fuel," said Tim Evans, an energy analyst for Citi Futures Perspective.
Crude oil for August delivery rose $1.72, or 1.2 percent, to settle at $145.29 a barrel at 2:55 p.m. on the New York Mercantile Exchange. Futures earlier touched $145.85, the highest since trading began in 1983.
The May 12 earthquake in China's Sichuan Province, the country's biggest in 58 years, killed more than 69,000 people. The Olympic Games will be held Aug. 8-24 in Beijing.
Heating oil for August delivery rose 3.45 cents, or 0.9 percent, to $4.106 a gallon on the exchange. Earlier, the fuel climbed 6.35 cents, or 1.6 percent, to a record $4.135 a gallon.
Concern that economic growth may be slowing dampened crude oil's gain earlier. US employers cut jobs for a sixth straight month and service industries shrank in June, signaling that the slowdown may deepen as the impact of federal tax rebates fades.
"You've got the economic reality that the US economy stinks, demand for oil stinks," said David Pursell, managing partner at Tudor Pickering Hold Co. in Houston.
The euro fell the most against the dollar in more than three weeks after European Central Bank president Jean-Claude Trichet indicated he may not boost interest rates again. The ECB raised its benchmark lending rate to 4.25 percent yesterday. Trichet said he has "no bias" on further moves.
The euro dropped 1.2 percent to $1.5695 at 3:22 p.m. in New York, from $1.5882 Wednesday.
Declines in the dollar were one of the factors responsible for a 48 percent increase in oil futures prices in the first half of the year.
Earlier yesterday, oil reached a record amid buying from investors seeking an alternative to tumbling stock markets and amid concern a conflict with Iran over its nuclear program would cut Persian Gulf supplies.
Nearly all of oil's "last $10 move is based on the potential for an Israeli-Iranian conflict," said Andy Lipow, president of Lipow Oil Associates LLC, a consulting company in Houston.
Oil prices are being led higher by factors including geopolitics, the weakening dollar, and concern about future supplies, Saudi Arabia's oil minister, Ali al-Naimi, said yesterday.
