Crude oil prices surged to a record high above $58 a barrel today (June 17), sustaining a rally built on strong demand for gasoline and diesel and on concerns about refiners’ ability to keep up, according to the Associated Press.
“This is a pivotal point we’re at now,” said oil analyst John Kilduff of Fimat USA in New York. “We’re one hiccup away from $60.”
After climbing as high as $58.60 per barrel, light sweet crude for July delivery settled at $58.47, an increase of $1.89 on the New York Mercantile Exchange (Nymex). That topped the exchange’s previous intraday high of $58.28 set on April 4 and exceeded the previous closing high of $57.27, set April 1.
While Nymex oil futures are more than 50% higher than a year ago, they are still well below the inflation-adjusted high above $90 a barrel set in 1980.
“The problem is not crude right now, there’s plenty of crude on the market,” said oil analyst Jamal Qureshi of Washington-based energy consultant PFC Energy, which estimates global oil demand is now slightly above 82 million barrels a day.
Still, the relatively small amount of surplus oil-production capacity is an important factor underlying the jitters on energy markets, keeping traders on edge about the possibility of output disruptions.
Strength in the price of crude has also continued to drive the price of diesel fuel to near record levels.
Diesel fuel is selling for about $1.70 a gallon wholesale (exclusive of tax and mark-up) in many of the large spot bulk markets, according to the Oil Price Information Service. At the pump, the average price of diesel stood at $2.34 a gallon on Thursday, up from $1.79 a year and near the all-time record of $2.388 a gallon set on April 11.
“There is simply no one, among refiners, traders and large marketers, that is willing to sell diesel in this runaway market,” said Tom Kloza, chief oil analyst at the Oil Price Information Service. “Without question, the U.S. national average will set a new record within the next few days.”