VIENNA -- Oil prices settled at a record high above $60 a barrel yesterday, reflecting traders' concerns about strong demand and potential supply bottlenecks.
With $60 no longer a threshold -- and with continued concerns about refining capacities -- prices appeared set to go even higher, analysts said.
Oil broker Tom Bentz at BNP Paribas Commodity Futures in New York said yesterday's rally was just a continuation of the larger uptrend that began in late May.
Bentz said there is also a speculative component to the surge in oil prices, though he also believes that the world's limited excess production and refining capacity have played important roles in keeping traders on edge about potential supply disruptions.
After climbing as high as $60.95 per barrel, an intraday record, the front-month August contract for crude rose 70 cents to close at $60.54 a barrel on the New York Mercantile Exchange. It was the highest settlement on record at Nymex, where crude futures began trading in 1983. The previous settlement high was $59.84 a barrel, set Friday.
Other petroleum products followed crude's rise. Heating oil futures, which serve as a proxy for all distillate fuels, including jet fuel and diesel, surged 2.57 cents to $1.68 a gallon. Gasoline futures rose 1.93 cents to $1.68 a gallon.
''The psychology of the market is that once $60 is breached, then there is tendency to test how much higher it can go, or how long $60 can be sustained," said Victor Shum, petroleum analyst at Texas-headquartered energy consultants Purvin & Gertz in Singapore.
With demand expected to average 84 million barrels a day in 2005, analysts say there is not enough of a supply cushion to shield the market from any prolonged output disruption. Excess production capacity is estimated to be about 1.5 million barrels a day, most of it in Saudi Arabia.
Another reason for trepidation among traders is the limited refining capacity in the United States, which is increasingly reliant on imports of gasoline. Any glitch in the US refining system puts more strain on the global supply chain.
Still, record-setting prices have yet to cool demand for gasoline in the United States, where consumption is up -- in a time when prices are 40 percent higher compared with a year ago. The average retail price for all three grades hit $2.24 a gallon Friday, up from $2.16 on June 10.