Oil prices rallied to a record high above $55 a barrel yesterday on rising fears of a winter fuel supply crunch and robust economic growth in China, the world's number-two user.
US light crude jumped 98 cents to a new high of $55.45 a barrel. Prices have hit a succession of record highs over $50 for the past three weeks.
Brent crude oil rose 83 cents to notch up a fresh record of $51.55 a barrel.
"All the demand signals are bullish," said Ms Deborah White, senior economist at SG Commodities. "And now we're in winter mode, so stocks have nowhere to go but down. High diesel prices in the US have not affected demand at all," she said.
US government data earlier this week showed a deepening yearly deficit of heating oil inventories. US supplies of heating oil fell to stand 12 per cent below this time in 2003, a gap that traders fear refiners will not be able to close if the heavy consuming north-east is hit with an early or severe winter.
The normal autumn stockbuild has been hampered by the damage that last month's Hurricane Ivan caused in the oil-producing Gulf of Mexico, where more than 400,000 barrels per day (bpd) of US production remains shut in.
Heating oil futures hit $1.6030 a gallon, also a new record high.
China, the engine behind this year's surge in oil demand, has moved to rein in blazing economic growth to avert a potential meltdown. Annual economic growth has slowed three quarters in a row, but at 9.1 per cent the pace of expansion remains strong, official data for July-September showed yesterday.
Earlier this week, data showed crude oil imports rising by a slower pace in September, but oil company officials say they are on track to expand by 10 per cent next year.
A weaker dollar has helped support oil's run-up by cushioning the impact of higher prices for consumers using other currencies, particularly in Europe and Asia.
US Federal Reserve Board Governor Mr Ben Bernanke said on Thursday that higher energy costs had constituted a "significant shock to the economic system" and were likely to cut US economic growth by a half to three-quarters of a percentage point this year.
And American consumers show no signs of curbing their purchases of gas-guzzling sport utility vehicles, despite high prices, DaimlerChrysler's chief of marketing and sales said. - (Reuters)
