MercoPress. South Atlantic News Agency

Record high for oil and prospects of further surge

The price of oil finished Friday in New York at a new record, 58,47 US dollars per barrel pushed by growing supply concerns with the beginning of the United States vacation period and insufficient refining capacity.

On ending Friday's trading, WTI for delivery next July rose 1,89 US dollars per barrel equivalent to 3,3% over Thursday's operations.

Actually the US reference oil price for a few minutes reached 58,60 US dollars before settling at 58,47, but above the 58,28 US dollars of last April 4.

In the London futures market the European Brent crude reference for delivery in August also reached a historic 57,90 US dollars per barrel, the highest since last April 4.

Two main reasons apparently caused the surge in prices, fears that US refineries will not be able to meet this summer's US demand, plus security in the US and UK diplomatic missions in Lagos, Nigeria, Africa's main oil producer and exporter.

On Wednesday OPEC oil producing countries agreed to lift the cartel's daily output limit by half a million barrels to 28 million bpd.

However OPEC estimates that in the last quarter of 2005 supply should reach 30,6 million bpd to meet demand, which is 100,000 bpd above the cartel's production.

Earlier in the week Saudi Oil Minister Ali al-Naimi had warned about the lack of sufficient refining capacity.

"There is no shortage of oil. It's there. What is driving the price is the inability to make the oil into products", he said.

In the US no new refineries have been built since 1976 and in the rest of the world capacity is also limited compared to demand, which should keep oil prices high.

The growth in global demand for crude oil and associated products has been spurred by China's rapid economic expansion and continuing high demand in the US.