Jitters push crude to a record high
WASHINGTON -- Oil prices jumped to a new high near $64 a barrel yesterday, reflecting the market's persistent uneasiness about strong demand, tight supplies, and a slew of threats to production around the globe.
Traders pinned the latest rally on security concerns in Saudi Arabia, refinery snags in the United States, and the continued rise of gasoline consumption in spite of soaring pump prices.
The average nationwide price for regular unleaded gasoline jumped almost 8 cents last week to $2.37 a gallon, or 49 cents above last year, the Department of Energy said yesterday. Still, government data show gasoline consumption is up almost 1 percent at 9.1 million barrels a day through July, compared with last year.
Oil analyst Marshall Steeves at New York brokerage Refco Group Inc. said oil and gasoline prices were likely to keep rising until there were signs of a significant dropoff in demand, or a sharp slowdown in economic growth.
Light, sweet crude for September delivery rose as high as $63.99 a barrel on the New York Mercantile Exchange. The contract settled $1.63 higher at $63.94 -- the peak close since Nymex trading began in 1983.
The previous closing high was $62.31, set Friday.
''The market clearly has the jitters," said Deborah White, energy analyst at SG Securities in Paris.
Broadly speaking, those jitters are tied to worldwide consumption, which is expected to average more than 84 million barrels a day in 2005, leaving only about 1.5 million barrels a day of spare production capacity that could be called upon in an emergency to offset a prolonged supply disruption.
Given such a slim margin for error in the supply chain, a large premium has been priced into every barrel of oil sold on futures markets. This premium takes into account the possibility of production outages stemming from hurricanes, terrorism, and labor strife around the globe.
The market has also kept a close eye on tropical storms in the Gulf of Mexico, fearing a repeat of last year's Hurricane Ivan, which damaged oil facilities and caused output in the region to drop for several months.
