Back-to-back refinery fires in Texas and Louisiana, as well as a North Sea oil field fire, worried oil traders on Friday, sending front-month crude futures to a close above $60 a barrel for the first time in more than two weeks.Oil prices rose more than $2 a barrel over the past week, with traders concerned about everything from hurricanes in the Gulf of Mexico to the strength of energy demand around the world.
"These supply problems contributed to the rally," said oil analyst Andrew Lebow at Man Financial in New York.
Light, sweet crude for September delivery rose 63 cents to settle at $60.57 a barrel on the New York Mercantile Exchange. The last time the front-month Nymex oil futures contract settled above $60 was July 13.Gasoline futures rose 1.67 cents to $1.76 per gallon on Nymex, where heating oil futures were down less than a penny at $1.6362 per gallon.
On London's International Petroleum Exchange, September Brent gained 61 cents to settle at $59.37 a barrel.
An explosion and fire at BP PLC's Texas City plant Thursday night came hours after a fire at a refinery owned by Murphy Oil Corp. Both fires have been contained, and the impact to the nation's supply is minimal. But with limited excess refining capacity in the U.S., traders get nervous anytime there is a threat to production.
BP also suffered a setback with a fire at its Schiehallion oil field in the North Sea, which normally produces 120,000 barrels of oil a day, but the production outage is expected to be short-lived.
Also lending support to the market on Friday was a report from the
Commerce Department, which said U.S. gross domestic product grew at an annual rate of 3.4 percent in the second quarter, evidence of a healthy business climate despite surging energy costs.
"The market has really shrugged off talk of lower demand," Lebow said, referring to recent reports from the International Energy Agency and
OPEC that consumption growth throughout Asia was slowing.
In addition to concerns about refinery operations, traders have been on edge over the world's limited excess oil-production capacity, which leaves little room for outages given strong demand from China and United States.
Supply outages, such as refinery blackouts and weather-related shutdowns, have factored into crude's upward movement in 2004 and much of this year. Oil prices are now more than 40 percent higher from a year ago.
Prices would need to reach $90 a barrel to match the all-time, inflated-adjusted high set in 1980.
