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Oil prices rally to new intraday high
Updated: 2005-08-08 20:14

Crude prices rallied to a new high Monday, reflecting market fears over the U.S. embassy closure in Saudi Arabia due to security threats and continued concerns that earlier shutdowns of U.S. oil refineries would reduce supply, the Associated Press reported.

"The market clearly has the jitters," said Deborah White, energy analyst at SG Securities in Paris.

"There is not much new happening, but very little has gotten better," she said.

Light, sweet crude for September delivery rose 49 cents to $62.80 in electronic trading on the New York Mercantile Exchange, off 10 cents from its new intraday high of $62.90.

Prices settled at $62.31 a barrel on Friday, a record close for crude since Nymex trading began in 1983.

That's at least 40 percent higher than a year ago, though crude prices would have to surpass $90 to reach the inflation-adjusted high set in 1980.

Gasoline edged up 2 cents to $1.8515 a gallon while heating oil rose nearly one and a half cents to $1.7435 a gallon.

"We had a much lower-than-expected build in natural gas supplies in the U.S. last week and this is also adding to general nervousness," White said.

September Brent crude futures on London's International Petroleum Exchange gained 57 cents to trade at $61.64, after the front-month contract hit a new record of $61.76 in earlier trading.

The market was on edge as traders monitored geopolitical developments following Sunday's announcement of a security threat against U.S. government buildings in Saudi Arabia, the world's biggest petroleum producing country.

The planned closure Monday and Tuesday of the U.S. Embassy in Riyadh and consulates in Jiddah and Dhahran was "in response to a threat against U.S. government buildings" in the kingdom, the embassy said, adding it would also limit nonofficial travel of its mission personnel.

It urged Americans residing in Saudi Arabia to keep "a high level of vigilance," but did not elaborate on the nature of the threat.

Meanwhile, analysts said U.S. economic figures on Friday showing payrolls expanded by 207,000 in July, the highest reading in five months, continued to boost bullish sentiment in the market.

"The U.S. economy looks healthy and it's safe to infer that the demand for oil and diesel will remain pretty firm and that the price of oil should be helped along as well," said commodities strategist David Thurtell of Commonwealth Bank of Australia in Sydney.

Oil prices rose even though the Organization of Petroleum Exporting Countries said late Friday that it increased oil production by 300,000 barrels a day in the last two weeks, to around 30.4 million barrels daily.

The market appeared to have largely disregarded the move, as concerns over refinery outages continued to weigh on traders' minds in a time when most refiners are running at full tilt.

ConocoPhillips was the latest to suffer a refinery outage. The company reported planned work and unexpected operational upsets at its 145,800-barrel-a-day refinery in Borger, Texas. The plant's sulfur recovery unit was shut Friday, with a restart planned for Wednesday.

Meantime, a fire broke out at a unit of Sunoco Inc.'s 330,000 barrels-a-day Philadelphia refinery over the weekend, the Philadelphia Inquirer reported Sunday, citing a company spokesman.

The outages have affected approximately 3 percent of the refining capacity in the United States, according to Barclays Capital.

At least seven other U.S. refineries have reported problems of one kind or another in the last two weeks.

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