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NEW YORK - Oil surged US$2 to a fresh 8-month high of US$70 a barrel on Thursday as US refinery breakdowns choked petrol supplies in the world's top consumer just ahead of peak summer demand.
London Brent crude gained US$2.03 to US$70.00 a barrel at 1818 GMT for the first time since Sept. 1. US crude rose US$2.07 to US$64.62 per barrel.
Oil prices jumped after news of a glitch at Murphy Oil's Meraux, Louisiana, refinery and the shutdown of a petrol pipeline in the US Northeast. Both were expected to be repaired later Thursday, but the problems added to a string of refinery outages that has sapped US petrol supplies ahead of the summer driving season.
"The petrol market is on a boil because of the string of refinery issues. Murphy is the latest one," said Jim Ritterbusch, president of Ritterbusch & Associates.
Despite record petrol pump prices above US$3 a gallon, there has been no let up in robust demand in the world's top consumer. More motorists than a year ago were expected to hit the roads during the May 26-28 US Memorial Day weekend, the traditional start to the driving season.
"For a majority of drivers, the thought of driving less is simply out of the question," said Edward Meir of Man Financial Energy Group. "We don't think we have seen the last of the current petrol spiral, and could very well see one more significant spike higher during the new few weeks."
Petrol futures surged Thursday by 9.7 cents, or more than 4 per cent, to US$2.4340 a gallon.
Stockpiles of petrol in the United States are roughly 7 per cent below a year ago after prolonged refinery maintenance and a rash of operational glitches slowed production.
US imports of petrol jumped recently to make up some of the shortfall -- rising to the fifth highest level on record at 1.5 million barrels per day last week -- but investors have taken little comfort.
"There's still a relatively low rate of refinery runs -- the current tightness in petrol is unlikely to ease in the short term," said Makoto Takeda, analyst at Bansei Securities.
Oil's gains were tempered by news of the end to an occupation of an oil hub by Nigerian villagers that had forced Royal Dutch Shell to cut output by 170,000 bpd.
Militant attacks have shut nearly 900,000 bpd, or 30 per cent of supply capacity, from Africa's biggest oil producer -- depriving refiners of crude prized as a feedstock for making petrol.
The Nigerian disruptions, together with worries over Iran's dispute with the West and supply cuts by the Organisation of Petroleum Exporting Countries, have pushed crude well above a January low near US$50.
Consumer nations have called on Opec to open the taps, but the group, which supplies a third of the world's oil, says it sees no need to act. Its next scheduled meeting is in September.
Abdullah al-Badri, the group's secretary-general, said Opec was content with prices in their current range.
"I don't want to see a low price and I don't want to see a high price," he said on Thursday.
- REUTERS
