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Last Updated: Thursday, 23 June 2005, 20:50 GMT 21:50 UK
Oil price hits $60 a barrel level
Nymex traders
Strong demand and refinery worries have pumped up crude prices
Crude oil prices have hit a record level of $60 a barrel on the US market amid strong demand.

Light sweet crude for August delivery rose to touch the $60 mark briefly then dipped back. It closed at $59.42.

In London, benchmark Brent crude was trading 90 cents higher at $57.48 on the International Petroleum Exchange - pushed higher by rising demand.

Surging crude prices have also fuelled big rises in petrol prices, pushing them to record highs.

In the UK, the Petrol Retailers' Association has warned that problems at refineries could push the price of diesel above 1 ($1.80) a litre for motorists before the end of the year.

Traders are grabbing any reason to push prices higher. With the $60-barrel in sight, traders just want to pierce that level
Jamal Qureshi, analyst

Traders also said that problems at a couple of US refineries - including a problem at a Shell plant in California - might have contributed to the latest spike in crude prices.

Winter worries

Industry watchers have also voiced concern about whether refineries will be able to convert enough crude oil into heating fuel to meet winter demand.

"What's really driving the market are longer-term concerns," said Helen Henton, head of commodities research at Standard Chartered.

"Refinery capacity issues are enough to keep the price high, although maybe not to put it above $60 for long."

It was not the first time the price for crude due for August delivery had traded above $60 a barrel - it previously hit that level in April and again on Monday.

Experts said that the $60 level had proved to be a magnet, attracting other buyers.

"Traders are grabbing any reason to push prices higher. With the $60-barrel in sight, traders just want to pierce that level," said PFC analyst Jamal Qureshi.

However, analysts are warning that strong demand for refined oil products, combined with supply threats, will keep the pressure on crude prices.

Opec, the cartel of oil producing countries, says it is pumping at capacity and the problem lies with refineries that cannot pump out enough petrol or diesel to cope with rising demand.

Demand for oil is high in the United States, where car use is on the rise because of the summer holidays, and in China, where industrial production is racing ahead.

See the frantic oil trading in New York

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