NYMEX crude oil futures ended up and just beneath record highs on Friday as gasoline again scaled an all-time peak.
The latest gasoline run-up was fueled by news of a glitch at the Hess refinery in Port Reading, New Jersey, adding to supply concerns ahead of the summer driving season which begins during Memorial Day weekend later this month.
Crude’s rise toward the close brought them to the highest levels since NYMEX introduced crude oil futures 21 years ago.
“It’s really risky to be short this weekend, what with security concerns out there and technicals awfully strong,” said Phil Flynn, market analyst at Alaron Trading in Chicago.
“For anybody who took profits today, there was a willing buyer ready to take a chance for a further spike in prices next week,” Flynn added.
Concerns of crude oil supply being disrupted by growing violence in the Middle East, which has raised oil’s security premium, remained the big reason why more players were not selling, according to traders.
With global demand now at a 16-year high amid economic growth in China and India and a rebounding U.S. economy, traders fear a further stress on supplies as OPEC output is approaching capacity.
NYMEX crude for June delivery settled at $41.38 a barrel, up 30 cents or 0.7 percent on the day and extending its advance in four days by $2.45. It peaked at $41.56.
Overnight, crude futures surpassed the previous all-time NYMEX high of $41.15 hit on Oct. 10, 1990, during the buildup to the first Gulf War.
NYMEX crude prices are up more than $9 or 28 percent since the year began. Allowing for inflation, prices are about half those during the oil price shock that followed the Iranian revolution in 1979. Technical analysts now see resistance at $43.50, with support expected to form at $40.30.
In London, June Brent expired 27 cents higher at $38.76 a barrel after trading from $38.19 to $38.95. July Brent settled 15 cents higher at $37.86.
NYMEX June gasoline settled at $1.4101 a gallon, up 0.95 cent after hitting a record $1.42. Gasoline has broken records almost every day since April 12 when it hit $1.1830, and has advanced nearly 24 cents or 20 percent.
The gasoline crack spread — gasoline’s premium over crude — had rocketed to over $18 a barrel at the day’s highs.
The latest record came amid talk of a fire at the Amerada Hess refinery in Port Reading, New Jersey. But fire officials in nearby Woodbridge said there had been no such fire. The company said later that a gasoline-making unit at the plant would be down for a day because of a power outage.
News that a gasoline-making unit at Marathon Ashland Petroleum’s refinery in Minnesota had been shut and will be down for about two weeks lift prices in the early going.
Crude futures have rallied despite a buildup in U.S. stocks in the last 10 of the past 11 weeks. Traders fear, for a variety for reasons, that gasoline may be short when peak demand hits this summer.
Gasoline stocks fell 1.5 million barrels to 202.5 million barrels last week, even refinery runs rose heftily indicating record demand ahead the Memorial Day weekend at month’s end, the traditional start of the summer driving season.
“This has reinforced the impression that we will not get to what is viewed as the minimum operating level of 215 million barrels by the time the driving season starts,” said Nauman Barakat, senior vice president at Refco Energy Group.
Saudi Arabia has called on OPEC to raise its output ceiling by 1.5 million bpd, but analysts note that this may only legitimize cheating as production is already more than 2 million barrels in excess of official limits. OPEC will meet on June 3 in Beirut to review production policy.
Iraqi oil exports, meanwhile, have stayed well below the post-war average after a pipeline sabotage.
NYMEX June heating oil settled down 0.78 cent at $1.0409 a gallon after peaking at $1.0550, below the overnight high of $1.0560 which was the loftiest since $1.13 during the week of March 16, 2003.