$67.10

reuters.com :

Oil charges above $67 on capacity worries

Oil prices raced to record highs above $67 a barrel on Friday as investors fretted over the world's strained capacity to refine and pump crude oil. U.S. light crude settled $1.06 higher at $66.86, off the record $67.10 a barrel hit earlier in the day. London Brent crude settled $1.07 higher at $66.45.

"The upstream and downstream constraints are real and long-term and we're seeing almost daily examples of them," said Michael Wittner, head of energy market research at Calyon. "We're going to have a very strong price environment until the steam is taken out of demand or until investment catches up and restores a spare capacity cushion to production and refining."

Supply limitations were underscored on Thursday by the International Energy Agency which cut its estimate of non-OPEC supply growth. Non-OPEC producers are failing to deliver as much oil as expected this year, leaving OPEC to fill the gap.

A new snag on Friday in the U.S. refining system, this time at Premcor's 175,000 barrels per day (bpd) refinery in Tennessee, threatened gasoline supplies. The list of outages includes several units at BP's giant 460,000 barrel-per-day (bpd) refinery in Texas City, and the loss of capacity at ConocoPhillips refinery in Illinois.

In real terms, stripping out inflation, oil is below the $80 a barrel on average for the year after the 1979 Iranian revolution. But at an average of more than $53 for the year to date on U.S. oil is up nearly $23 on the average for 2003.

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