LONDON, Aug 12: Oil prices raced to record highs near $67 a barrel on Friday as investors fretted over the world’s strained capacity to refine and pump crude oil. US oil has risen 51 per cent since the start of the year. The stage could be set for further gains, with no let-up seen in global demand growth and no signs that $60-plus oil is harming the economy of the world’s largest consumer, the United States.

US light crude was up $1.05 at $66.85, just off a new all-time high of $66.95 a barrel. London Brent crude was up $1.08 at $66.46. “The upstream and downstream constraints are real and long-term and we’re seeing almost daily examples of them,” said Michael Wittner, head of energy market research at Calyon.

“We’re going to have a very strong price environment until the steam is taken out of demand or until investment catches up and restores a spare capacity cushion to production and refining.”

Supply limitations were underscored on Thursday by the International Energy Agency which cut its estimate of non-Opec supply growth. Non-Opec producers are failing to deliver as much oil as expected this year, leaving Opec to fill the gap.

That has not proved a problem so far, with global markets well supplied on both crude and products. Stocks held in OECD countries at 54 days of forward demand cover is one of the market’s biggest bearish indicators, according to Calyon’s Wittner. “But they are being overwhelmed, correctly, by the capacity constraints,” he said.—Reuters