LONDON, June 17: Oil prices jumped above $57 per barrel on Friday and were fast approaching record high points on concerns that shortages in refinery capacity could mean that strong demand for distillates would not be met during the fourth quarter, analysts said.
New York’s main contract, light sweet crude for delivery in July, rose 77 cents to $57.35 per barrel in early deals after reaching an intra-day high of $57.80.
In London, the price of Brent North Sea crude oil for delivery in August climbed 78 cents to $57 per barrel after peaking at $57.32 on Friday.
Prices have risen for three days in a row to reach the highest levels since April 4 when they struck historic levels of $58.28 per barrel in New York and $57.65 in London.
Oil prices are being “driven higher by strong distillate demand”, analysts at the Sucden brokerage firm said.
Societe Generale analyst Deborah White said the market was worried about the fourth-quarter when demand for crude oil would be about 2.2 million barrels per day (bpd) higher than during the same period in 2004.
“Is there enough refining capacity in the world, is there enough light sweet crude in the world to make the incremental distillates that the market needs?” she said, echoing traders’ concerns.
Analysts were expecting an increase of 4.0 million bpd between now and the fourth quarter — a figure that has fuelled speculation that prices could reach $60 per barrel.
“To rally up to $60, you really need to have a refinery accident or a draw in distillate stocks,” White said.
Analysts and officials have pointed out that there has been no significant investment in new refineries for about 20 years despite spiralling demand for finished petroleum products, including distillates and petrol. Distillates comprise heating fuel and diesel.—AFP
