Oil prices hit fresh record highs yesterday before slipping back on profit-taking and as fears eased that supply in the Gulf of Mexico may be disrupted by Tropical Storm Katrina.
Nymex West Texas Intermediate for October delivery hit a new nominal high of $68 a barrel in early trade as the cauldron of supply issues currently driving the market continued to bubble furiously.
Wednesday's US oil inventory data provided the catalyst for the latest spike higher. Although crude supplies increased against expectations of small losses, stocks of petrol, which have helped support the whole oil complex for the last four months, fell unexpectedly sharply.
"Recurrent and persisting refinery problems continue to support prices," said Deborah White, strategist at Société Générale.
US crude was trading last night at $67.60 (€54.93) a barrel, while London Brent crude was at $66.39.
Some analysts were beginning to question how much further the current rally in global oil prices could go, both from a technical standpoint and from an economic one. Strategists at Barclays Capital said they believed prices would trend higher until a "bite point" was found in the global economy.
They added that prices could hit $70 a barrel on the basis of short-term disruptions to supply, but could not move sustainably above this on the evidence that prices were only having a limited impact on the economy.
They concluded: "The march to $60 is still too recent a phenomenon to be able to produce any sufficient degree of certainty in terms of sustainability for the next significant step forward."
