Either traders haven't heard Daniel Yergin's pronouncement Tuesday that Peak Oil is not at hand, or they didn't believe it.  --  Oil prices reached an all-time high on Thursday, the Financial Times (UK) reported.[1]  --  Early Friday Asian traders said prices were heading higher:  "'As long as global oil demand remains strong, in the short term we can't expect prices to drop significantly,' Victor Shum, a Singapore-based analyst with U.S. energy consultancy firm Purvin and Gertz, said.  'The supply issue, which is capacity tightness in crude production and refineries, is not going to be solved any time soon . . . for the remainder of this year, certainly prices will remain around $50 to $60,'" AFX News reported.[2]  --  OPEC's promise to act will apparently be put to the test, but "'OPEC will try to do its part but it is powerless in influencing the market at this point,' Shum said." ...

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CRUDE OIL PRICES TOUCH $60 A BARREL
By Financial Times reporters

Financial Times
June 23, 2005

http://news.ft.com/cms/s/abe64008-e410-11d9-a754-00000e2511c8.html

U.S. oil futures on Thursday rose above $60 a barrel amid high demand for petrol and diesel in the U.S. and market worries about lack of spare refining capacity.

The Dow Jones Industrial Average slid more 100 points as transport shares fell. Delta Air Lines was down 4 per cent, Continental Airlines slipped 3 per cent, and FedEx, which warned on Thursday about rising fuel costs, fell 7 per cent.

The new nominal all-time high was supported with futures contracts for delivery later this year and in the beginning of 2006 trading between $60 and $61. The U.S. Department of Energy reported a jump in consumption in spite of high oil prices. Diesel consumption is up 6.9 per cent in the last four weeks compared with the same period a year ago. Petrol demand is 2.5 per cent up.

“Those numbers are incredibly strong considering the high prices for both petrol and diesel,” said Phil Flynn of Alaron Trading in Chicago.

The strong demand has dented U.S. crude oil inventories, which fell last week for the third time in a row, in spite of the Organizations of the Petroleum Exporting Countries pumping at its highest rate in 25 years.

"No buffer stock has been built up during the second quarter and robust demand continues to reinforce our view of the likelihood of further price increases," said Kevin Norrish, of Barclays Capital in London.

The price spike would put pressure into OPEC to consider an increase in its production ceiling, only a week after the rising it by 500,000 barrels a day, to 28m b/d.

OPEC president, Sheik Ahmad Fahad Al-Sabah said early this week he would start consultations with the cartel members as soon as today for an additional quota increase if the prices remained above $50.

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OIL PRICES HIGHER IN ASIAN TRADE; CONTINUE TO HOVER NEAR 60 USD A BARREL

AFX News
June 24, 2005

http://www.forbes.com/markets/feeds/afx/2005/06/23/afx2109676.html

SINGAPORE -- Oil prices continued higher in midmorning trade here, hovering close to 60 usd a barrel, with tight refining capacity seen keeping prices firm for the rest of the year, dealers said.

At 11:15 am, the benchmark New York contract for light sweet crude delivery in August was at 59.74 usd a barrel, up 32 cents from its overnight close of 59.42 usd in New York, a fresh closing high.

Overnight the contract edged above the key psychological barrier of 60 usd as speculators seized on supply concerns ahead of the northern hemisphere winter.

'As long as global oil demand remains strong, in the short term we can't expect prices to drop significantly,' Victor Shum, a Singapore-based analyst with U.S. energy consultancy firm Purvin and Gertz, said.

'The supply issue, which is capacity tightness in crude production and refineries, is not going to be solved any time soon . . . for the remainder of this year, certainly prices will remain around 50 to 60 usd.'

Shum said spikes above 60 usd would occur if there is any disruption to refineries, which looks increasingly likely because they are running at so close to full capacity.

'Their infrastructure system is prone to some unplanned breakdowns when they are running very full,' he said, adding U.S. refineries were operating at 96-97 pct of capacity currently.

Daniel Hynes, a commodities analyst with the ANZ Bank in Melbourne, Australia, said today's trading would be crucial in determining if prices would climb above and remain over 60 usd in the short term.

'I think it will be important to see if it can establish itself above that level. It's a pretty key psychological mark,' Hynes said.

'Trading will be especially important in the U.S. leading into the weekend. It will certainly be a key 24 hours.'

Hynes said that if prices did not break through 60 usd again, they could fall back towards 55 usd, still above the Organization of Petroleum of Exporting Countries' (OPEC's) target of around 50 usd.

OPEC president Sheikh Ahmad al-Fahd al-Sabah said on Monday he would hold talks with other cartel members on hiking output by another 500,000 barrels per day (bpd) if prices had not dropped by Friday.

Prices were moving around 58-59 usd on Monday.

OPEC's 11 members agreed last week to raise the group's production ceiling by 500,000 bpd on July 1, with the option of releasing another 500,000 bpd before September if prices remained high.

However OPEC's announcements failed to have any impact on the market and Shum said the release of the second tranche of 500,000 bpd would similarly fail to bring prices down.

'OPEC will try to do its part but it is powerless in influencing the market at this point,' Shum said.

He said the main problem was that Saudi Arabia, the only cartel member with enough spare capacity to provide extra supplies, had heavy crude, which requires major refining to make into gasoline and diesel.

'The market is concerned about product supply; actually crude supplies are okay at the moment,' he said.

'Saudi Arabia can supply heavy, solid crude oil to the market but there are not a lot of sophisticated facilities in the world to refine it.'