WASHINGTON – Crude oil prices surged to a record high above $58 a barrel on Friday, sustaining a rally built on strong demand for gasoline and diesel and on concerns about refiners' ability to keep up.
"This is a pivotal point we're at now," said oil analyst John Kilduff of Fimat USA in New York. "We're one hiccup away from $60."
After climbing as high as $58.60 per barrel, light sweet crude for July delivery settled at $58.47, an increase of $1.89 on the New York Mercantile Exchange (search). That topped the exchange's previous intraday high of $58.28 set on April 4 and exceeded the previous closing high of $57.27, set April 1.
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.
"The problem is not crude right now, there's plenty of crude on the market," said oil analyst Jamal Qureshi of Washington-based energy consultant PFC Energy, which estimates global oil demand is now slightly above 82 million barrels a day.
Still, the relatively small amount of surplus oil-production capacity is an important factor underlying the jitters on energy markets, keeping traders on edge about the possibility of output disruptions.
Gasoline futures (search) climbed 4.93 cents to settle at $1.6471 per gallon on Nymex, where heating oil futures rose 2.63 cents to $1.6518 per gallon.
In London, Brent crude futures surged $1.75 to settle at $57.87 per barrel on the International Petroleum Exchange.
OPEC failed to soothe the market earlier this 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, the Organization of Petroleum Exporting Countries (search) is pumping close to 30 million barrels a day, or about 35 percent of global demand.
OPEC said it would consider another 500,000-barrel-per-day increase if prices don't fall and it blamed the stubbornly high prices on insufficient refining capacity around the globe, an opinion that many analysts agree with.
Oil prices had dropped below $47 a barrel in May as traders locked in profits from the prior runup and as data pointed to slower economic growth and rising crude oil inventories around the globe. But the cooling off period didn't last long and prices returned to their perch above $50 a barrel before the month was over.
The Energy Department's weekly petroleum report has helped push prices higher in recent days because it showed that gasoline demand in the United States has averaged nearly 9.5 million barrels a day over the last four weeks. That's 3 percent above the same period last year — a pace that, if sustained, could push up gasoline prices, which now average $2.13 a gallon nationwide.
Demand for distillate fuel, which includes diesel and jet fuel, has averaged 4.1 million barrels a day over the past four weeks, an increase of 6 percent from the same period a year earlier.
"These are scary demand numbers," said Tom Kloza, director of Wall, N.J.-based Oil Price Information Service.
The Energy Department (search) report said crude oil inventories stood at 329 million barrels, or 9 percent above last year, while gasoline inventories were at 215.7 million barrels, or 5 percent higher than a year ago.
But PFC's Qureshi said he expected supplies to tighten as summer wears on. "We're at a turning point," he said.
Fears of potential refinery glitches during the hurricane season in the United States have also added to market insecurity in recent days.