LONDON, Oct 22: Oil prices surged on Friday, reaching a new record above $55 in New York on worries about low stocks of US heating fuel and strong demand ahead of the northern hemisphere winter.
The benchmark contract, light sweet crude for delivery in December, surged 92 cents to $55.39, cracking the previous record of $55.33 set on Monday. "There is a phobia about tightness of supply and whether or not this will correct soon," said Alaron Trading analyst Phil Flynn.
In London Brent North Sea crude oil for December delivery increased by 61 cents to $51.33 in late deals. "It's the same story ... everybody is worried about winter," Societe Generale analyst Frederic Lasserre said in Paris.
"Everybody is making their calculations - asking whether it will be a cold or mild winter, how much stock of heating oil will be available and what will be the output from refineries?"
After a brief decline in prices on Thursday due to profit taking, the market bounced back when a US Department of Interior report showed only a "negligible improvement" in crude production from wells in the Gulf of Mexico, recently hit by devastating hurricanes.
Prices shot up earlier in the week after a US Department of Energy weekly snapshot showed US stocks of distillates - mostly diesel and heating oil - fell 1.9 million barrels to 119.0 million barrels in the week to October 15. It was the fifth consecutive weekly decline.
Oil prices' march higher on Friday came as a senior Chinese official said that while record oil prices have had only "limited" impact on the Chinese economy, the country needs to keep a close watch on the issue.
"Rising oil prices have consequences for both the world and Chinese economies but the impact on China is limited," said Zheng Jingping, spokesman for the National Bureau of Statistics (NBS). "Although the impact is limited, we should still keep a close eye on the trends (and) we need to prepare to adopt measures to meet the challenge." -AFP
