Oil: Price nears record on US refinery snags

NEW YORK - Oil climbed within pennies of its all-time high as US refinery outages hampered efforts to meet strong demand in the world's biggest consumer.

US light sweet crude settled up 93 cents at US$62.31 a barrel - the highest settlement on record - after climbing as high as US$62.45, which was 5 cents shy of the all-time record set just Wednesday.

London Brent crude gained 95 cents to US$61.07 a barrel.

"It's no secret that refineries are the problem. There wouldn't be a problem if there was any slack in the system," said Tony Nunan, a manager at Mitsubishi Corp.'s international energy business in Tokyo.

A half-dozen refineries in the United States have been forced into unplanned shutdowns since late July and some have had to delay planned restarts, leaving the market on edge after US petrol stocks fell a sharp 4 million barrels last week.

Petrol inventories have fallen into the lower half of their seasonal average, while demand is running 1.1 per cent stronger than last year with a month left in the summer season.

US supplies of distillates, which include heating oil, rose 1.5 million barrels last week to stand almost 3 per cent higher than a year ago, but even stronger demand growth for these fuels coupled with refinery trip-ups could dent supplies before winter.

"Demand is so high and capacity is so low, we can go from comfortable to uncomfortable inventories within a month," Nunan said.

Adding to concerns was news of a pipe bomb attack at PDVSA's Maracaibo headquarters in Venezuela, the world's No. 5 oil exporter. PDVSA said the three pipe bombs that exploded caused no damage or injuries.

Additional disruptions could come from an unusually active Atlantic hurricane season, which has already produced eight named storms and could culminate in as many as 21 tropical storms and 11 hurricanes, US government weather forecasters have said.

Prices have rallied more than 40 per cent this year despite OPEC pumping at its highest rate in more than 25 years, with traders fearing the cartel's thinned cushion of spare production capacity may be insufficient to compensate for any unexpected outages.

Total OPEC production rose 290,000 bpd to 30.24 million bpd in July, the highest since December 1979, as Iraq boosted exports and the United Arab Emirates restored output at oilfields after maintenance, a Reuters survey showed.

OPEC is due to meet next month to discuss its output policy, where some members favor suspending quotas to allow a production free-for-all, Nigeria's top oil official Edmund Daukoru said on Thursday.

Most members, aside from Saudi Arabia, are already pumping flat out.

Daukoru said OPEC might decide to keep production quotas unchanged or raise them, but would not cut output.

- REUTERS