LONDON, April 4: World oil prices hit fresh historic highs on Monday, climbing above $58 a barrel in New York on tight supplies, as Opec began consultations to consider raising output by 500,000 barrels per day. New York’s main contract, light sweet crude for May delivery, struck a record intra-day high of $58.28 in early deals amid worries over US refining capacity and the continued fallout from a study that indicated prices could hit $100, analysts said. It later stood at $57.65, a rise of 38 cents on Friday’s closing price.
The price of Brent North Sea crude oil for delivery in May hit $57 for the first time, peaking at $57.65 per barrel. It later stood at $57.22, up 71 cents.
Oil prices have been underpinned in recent days by worries about a lack of US refining capacity and a Goldman Sachs study that forecast crude could top $100 per barrel.
“Many market players, particular funds, believe prices will climb a lot higher before demand for oil drops,” Societe Generale analyst Frederic Lasserre said.
Meanwhile, gasoil prices reached a historical record of $542 per ton in London on Monday, a rise of $20 from Friday’s close.
Despite the fact that the United States enjoys rising levels of crude stockpiles, there are fears that refineries will be unable to turn it into gasoline quickly enough ahead of the country’s so-called “summer driving season” that begins next month.
“Basically, the fear is that with the gasoline season coming into play now, there will be insufficient supply to meet demand,” said Eswaran Ramasamy, the Singapore director of energy information giant Platts.
Americans were gearing up for their summer vacations beginning in May, when they take to the roads.
New regulations for oil refineries introduced by the US last year calling for stringent environmental specifications have left companies scrambling to meet standards, Ramasamy said.
“Now, we have to wait to see how many refineries... can meet the specifications. If they are unable to, then the market is in for another bull run.”
Compounding tight refinery capacity has been recent news of a shutdown at Venezuela’s Paraguana refinery, the largest in the world, owing to electrical problems.
The shutdown came after US oil major ChevronTexaco was forced to shut the crude distillation unit at its 210,000-barrels per day Pembroke refinery in Wales late last month, which followed a fatal blast at BP’s biggest oil refinery in the US state of Texas.—AFP
