LONDON – Oil prices (search) rose to touch $60 for a second day on Friday, extending a streak of record highs that have yet to curb robust U.S. energy demand.
U.S. crude futures settled up 42 cents at $59.84 a barrel Friday after briefly matching Thursday's $60 peak -- the highest since the New York Mercantile Exchange (search) began trading oil in 1983. London Brent crude rose 39 cents to $58.35 a barrel.
Rapidly rising consumption in the United States, the world's biggest consumer, threatens to strain oil supplies and refining capacity when demand peaks this winter.
The potential for a fourth quarter supply crunch has prompted hedge funds and speculators to bet on a push to new records, traders said.
"The big message this week was that demand is still staying strong in the face of high oil prices," said Tony Nunan, manager at Mitsubishi Corp.'s international petroleum business in Tokyo.
Oil at $60 equates to a gain of about 38 percent since the start of the year. But analysts said sky-high prices have yet to seriously dent global demand, leaving the global supply chain with little spare to deal with any unexpected disruption.
U.S. government data on Wednesday showed a fall last week in crude oil stockpiles as refineries worked at close to full throttle to meet soaring demand.
Distillate demand is just under 7 percent higher than a year ago, while gasoline demand is running 2.5 percent higher.
"Oil demand will increase when facing summer and winter ... We are worrying that the tendency is that (prices) will increase," Purnomo Yusgiantoro, oil minister in OPEC member Indonesia, told reporters in Jakarta.
"The bottom line is that a market that can't go down goes up," said John Brady of ABN AMRO in New York. "As long as the economy and the stock market advances or holds its ground then energy can continue to move on."
Members of the Organization of Petroleum Exporting Countries (search) (OPEC) are already running near maximum capacity and say they are powerless to stem crude's rally.
Saudi Oil Minister Ali al-Naimi has said the kingdom, the world's biggest exporter, is able to lift output but that there was no demand for extra crude from the world market due to bottlenecks in the global refining system.
Although U.S. data has been strong, the world's No. 2 consumer China has started the year with weaker than expected consumption, possibly as refiners curb domestic supplies due to artificially low state-set retail fuel prices.
The country's exports of gasoline and diesel surged in May from a year ago as oil companies sought to make up for poor domestic margins by boosting international sales.
China's imports of crude oil in May were up 8.2 percent from a year ago, far less than last year's runaway average 35 percent rise.
But a report on Chinese state television that Beijing could decide to begin filling its newly constructed strategic oil reserves at the end of this year may place additional strain on global markets in the fourth quarter.
The additional demand resulting from any Chinese move to fill its tanks could mean an extra 70,000 to 90,000 bpd of imports if Beijing hopes to reach its target of 20 days' worth of supply by the end of the decade, analysts have estimated.