Angel Tarragon
Dawn Dragon
NEW YORK (June 24 2005): Oil prices struck record $60 a barrel on Thursday as worries that strong demand growth will strain global production capacity drew in a flurry of speculative fund buying. US crude futures on the New York Mercantile Exchange rose $1.91 to $60 a barrel before settling up $1.33 at $59.42, bringing gains this year to 38 percent. London Brent crude on the International Petroleum Exchange rose $1.38 to $57.96.
Oil analysts have said rising demand from the United States, China, and India have caught world producers and refiners off guard, leaving little spare capacity in the event of a supply disruption.
Meanwhile, members of the Organisation of Petroleum Exporting Countries, already running near full throttle, say they are powerless to stem crude's rally.
"Bottom line, there's a lot of money still chasing the market. There's no doubt that demand continues strong," said Mark Routt, an analyst at Energy Security Analysis Inc.
"I think there's also a very understandable human component. Once the record has been broken, there is a tendency to want to test the system to see where the limits are," he said.
US government data released on Wednesday showed ballooning energy costs had yet to dent robust consumption in the United States, the world's biggest energy market.
Distillate demand is roughly 7 percent higher than a year ago, adding to concerns that refiners will struggle to build stockpiles ahead of peak consumption in the fourth quarter, while gasoline demand is running 2.5 percent higher.
"We think fundamentals are really the driving force" Guy Caruso, head of the US Energy Information Administration told Reuters this week.
US refiners worked close to full-throttle to try to meet demand, pushing the nation's crude stocks further from six-year highs touched last month, although they remained 8 percent higher than a year ago, the US data showed.
Signs that US consumption is holding firm have encouraged many investors to keep betting on gains, though analysts say investment flows are becoming more cautious as the world tries to gauge the impact of record high prices.
"The best gauge is what's happening on demand, and so far demand has held up very nicely and continued to grow," George Kirkland, head of production for Chevron Corp, told Reuters this week.
"As long as the growth is there, obviously, the economies can afford this higher price".
Oil analysts have said rising demand from the United States, China, and India have caught world producers and refiners off guard, leaving little spare capacity in the event of a supply disruption.
Meanwhile, members of the Organisation of Petroleum Exporting Countries, already running near full throttle, say they are powerless to stem crude's rally.
"Bottom line, there's a lot of money still chasing the market. There's no doubt that demand continues strong," said Mark Routt, an analyst at Energy Security Analysis Inc.
"I think there's also a very understandable human component. Once the record has been broken, there is a tendency to want to test the system to see where the limits are," he said.
US government data released on Wednesday showed ballooning energy costs had yet to dent robust consumption in the United States, the world's biggest energy market.
Distillate demand is roughly 7 percent higher than a year ago, adding to concerns that refiners will struggle to build stockpiles ahead of peak consumption in the fourth quarter, while gasoline demand is running 2.5 percent higher.
"We think fundamentals are really the driving force" Guy Caruso, head of the US Energy Information Administration told Reuters this week.
US refiners worked close to full-throttle to try to meet demand, pushing the nation's crude stocks further from six-year highs touched last month, although they remained 8 percent higher than a year ago, the US data showed.
Signs that US consumption is holding firm have encouraged many investors to keep betting on gains, though analysts say investment flows are becoming more cautious as the world tries to gauge the impact of record high prices.
"The best gauge is what's happening on demand, and so far demand has held up very nicely and continued to grow," George Kirkland, head of production for Chevron Corp, told Reuters this week.
"As long as the growth is there, obviously, the economies can afford this higher price".
