Crude oil closed at a record-high $59.37 a barrel Monday, amid continued predictions of tight supply and booming demand for gasoline.
Figures released Monday by the U.S. Energy Department also showed gasoline up 4.6 cents a gallon from a week ago.
As contracts for delivery of fuel next winter also soared to record levels, analysts cited several market-rattling factors, including a threatened strike today by oil workers in Norway, the world’s third-biggest petroleum producer, and political unrest in Nigeria, the fifth-biggest U.S. petroleum source.
“Any little threat to supply sends prices higher, because there isn’t much spare capacity,” said Joseph Allman, an oil and gas analyst with RBC Capital Markets in Houston.
Even with pump prices near record highs, especially for diesel fuel, U.S. demand continues to rise, Allman noted.
Gasoline prices in the U.S. average about $2.13 a gallon, an increase of more than 40 percent over the past two years, but government data released last week showed that demand is up almost 3 percent from a year ago – a growth rate that surprised many analysts.
“The economy has accepted $50 oil. We accepted $2 gasoline, too,” said oil tycoon Boone Pickens, who runs a billion-dollar hedge fund that invests in energy commodities and equities. “I think within a year from now, you’re probably looking at $3 gasoline and you’re probably looking at something over $60 for oil.”
While gas prices are up about 5 percent from a year ago, the price of diesel fuel, a niche product that tends to have much more volatile price fluctuations, has soared 32 percent, hitting $2.45 a gallon in Massachusetts, according to the newest AAA survey.
Because the United States has a much larger and more competitive set of refineries for gasoline than it does diesel or its chemical cousin, heating oil, petroleum increases usually cause sharper spikes in prices for nongasoline fuels.
Wholesale prices for July delivery of heating oil have soared 62 percent over the last year, compared with a 37 percent increase in gasoline futures.
The prospect of another attempt by OPEC to cool prices did not impress brokers, who said the effort could actually backfire by highlighting the group’s dwindling excess production capacity.
Still, “it looks like we might have difficulty holding these levels,” said Mike Fitzpatrick, an oil broker at Fimat USA in New York. “You’re seeing a great deal of reluctance among buyers to pay these higher prices.”
Oil analyst Andrew Lebow at Man Financial in New York said “once we’re in this $55-$60 area, it’s been kind of hard to justify. But it is what it is. It seems like we’ll hit $60 at this point.”
In trading Monday on the New York Mercantile Exchange, oil closed up 1.5 percent to $59.37. That was the highest nominal price, unadjusted for inflation, since the Nymex began oil trading in 1983. Overall oil prices are up 53 percent from a year ago.
The Organization of Petroleum Exporting Countries last week agreed to raise production quotas by at least 1.8 percent starting July 1.
But already OPEC pillars Iran, Indonesia, and Venezuela are failing to hit their output targets.
