U.S. Oil Prices Hit Record on Supply Worries
U.S. oil prices hit an all-time high Thursday amid continuing concerns that an expanding global economy is causing a surge in fuel demand that will outpace supply.
Crude oil for June delivery closed at $41.08 a barrel in New York trading, up 31 cents and besting the $40.60 mark set after Iraq’s invasion of Kuwait in October 1990.
Prices hit $41.17 a barrel in after-hours trading, exceeding the previous record intraday price of $41.15.
Several factors are at play, including robust global growth, turmoil in the Middle East and the approach of the U.S. vacation season. American motorists account for about 12% of world oil consumption.
“This is not a spike in the oil price due to a single factor,” said Paul Horsnell, an analyst with Barclays Capital.
World oil demand is proving far stronger than expected, thanks to booming economic growth, according to the International Energy Agency. Domestic demand shows no sign of letting up either, said Richard Barrett of commodity futures trader Granite Capital Inc.
“U.S. gasoline stocks are dropping dramatically and the market is not rectifying the situation,” he said.
Allowing for inflation, prices are still only half of where they where during the oil price shock that followed the Iranian revolution in 1979.
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