International oil prices hit fresh 3-1/2 year peaks on Friday led by an all time high price for U.S. gasoline, a market haunted by fears of a shortage in the period of peak summer demand.
London’s Brent crude stood at $34.77, up 39 cents, hitting a session high at $35.00, its highest since October 2000.
U.S. light crude gained 34 cents to $37.65 a barrel. U.S. gasoline hit a fresh all-time peak of $1.2510 a gallon on Friday.
“Gasoline is relentless in the face of weakening fundamentals across the rest of the crude complex,” Josh Sadler, energy analyst with Societe Generale, said in a report.
“Current (U.S. gasoline) stock levels need to increase at least five percent by the end of May to alleviate the continued upward price pressure,” he said.
Further ahead, Sadler said tightening credit in China could slow down its sizzling economy and erode its soaring demand for oil.
China this week ordered some smaller banks to stop lending for several days until May 1, when the week-long Labor Day holiday begins, in its latest bid to clamp down on easy credit.
Chinese Premier Wen Jiabao told Reuters this week Beijing was committed to forceful measures to cool its dangerously fast-growing economy.
But that remained a backdrop to the U.S. gasoline picture, said Tony Nunan, risk management manager at Mitsubishi Corp.
“The market is so focused on the U.S. gasoline situation that China’s news does little to check the fact that growing demand is still an underlying bullish factor,” Nunan said.
The International Energy Agency (IEA) on Thursday urged OPEC to boost production limits at their June meeting to help top up world oil inventories, but cartel-member Venezuela said there were no plans to do so.
“That is not planned,” Venezuelan Energy Minister Rafael Ramirez said on Thursday, “We have been cautious. We did one cut, and we will continue to evaluate what measures we will take to defend prices.”
IEA Executive Director, Claude Mandil, disputed OPEC’s contention that crude stocks were sufficient and that the shortage was only in oil products, especially U.S. gasoline, arguing that the inventory levels did not allow the necessary safety margin.
“If something unexpected happens, there could be a real oil crisis,” he told Reuters in Paris.
OPEC will meet next on June 3 in Beirut. The cartel agreed from April 1 to cut one million barrels per day in output to help counter an expected seasonal dip in demand in the second quarter.