Oil hits record – again

Oil prices settled at a record high near $67 Friday, as U.S. refinery outages looked set to test gasoline supplies in the world’s biggest-consuming nation.

The threat of hurricanes in the Gulf of Mexico and concerns over Iran’s decision to resume uranium-conversion activities also fueled the price increase, analysts said.

But some traders said purely speculative buying was a big factor behind the $10 per barrel surge in just over three weeks.

“This is a bubble that will have to burst at some point,” said Mike Fitzpatrick, an oil broker at Fimat USA in New York. A large increase in supply or a noticeable dropoff in demand will be needed to end the buying frenzy, he said.

Light sweet crude for September delivery gained $1.06 to settle at $66.86 a barrel Friday on the New York Mercantile Exchange — the highest close since Nymex trading began in 1983. Crude peaked at $67.10 earlier in the day, up from Thursday’s settlement price of $65.80. On July 20, prices settled at $56.72.

Oil prices are 46 percent higher than a year ago, but they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.

Gasoline futures climbed to $1.990 a gallon, an increase of 4.92 cents. Heating oil futures rose 0.7 cent to $1.9050 a gallon.

Analysts said gasoline demand, currently at its peak in the U.S. summer driving season, was pushing crude’s gains. Last week, U.S. gasoline demand picked up by 1.4 percent from a year ago, according to government data.

Coupled with new reports of refinery outages this week, traders fear U.S. refiners, already running at 95 percent of capacity, are straining to satisfy the rising demand.

“People fear there won’t be enough gasoline at a time when it’s so greatly demanded, so they’re just buying, buying and buying,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.