NEW YORK, June 23, SPA– Oil prices surged nearly $2 on Thursday to a record $60 a barrel as dealers worried that continued strong demand growth would strain global production capacity.
U.S. crude futures on the New York Mercantile Exchange rose $1.91 to $60 a barrel, bringing gains this year to nearly 40 percent. London Brent crude on the International Petroleum Exchange rose $1.80 to $58.38.
"Where this cycle will end, we can all speculate on that, but I would suggest to you it will take a few years to sort out where it”ll all end," Exxon Mobil CEO Lee Raymond told Reuters this week.
U.S. government data on Wednesday showed ballooning energy costs had yet to dent demand, underscoring concerns about tight spare oil production and refining capacity.
Distillate demand is roughly 7 percent higher than a year ago, adding to concerns that refiners will struggle to build stockpiles ahead of peak demand in the fourth quarter, while gasoline demand is running 2.5 percent higher.
"What”s really driving the market are longer term concerns," said Helen Henton, head of commodities research at Standard Chartered. "Refinery capacity issues are enough to keep the price high, although maybe not to put it above $60 for long."
As refiners worked close to full-throttle to try to meet demand, overall crude stocks eased further from six-year highs touched last month, but were still 8 percent higher than a year ago, the U.S. data showed.
Signs that U.S. 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.