Oil prices hits new record 68$ on storm

Oil surged to a record $68 a barrel Thursday, hounded by supply concerns due to a growing threat to oil facilities from an Atlantic storm and a large fall in U.S. gasoline stocks.

U.S. light crude for October delivery rose 18 cents to $67.50 a barrel by in early morning electronic trading, after rising as high as $68, the highest since U.S. crude futures started trade in 1983. London Brent crude was up 34 cents to $66.35.

Dealers are concerned about a thin stock cushion after a rash of disruptions and tensions in oil-producing countries cut crude output and propelled prices to a series of record peaks.

Gasoline stockpiles in the United States, the world's top oil consumer, registered a greater-than-expected slide of 3.2 million barrels in the week to Aug. 19, widening the supply gap from a year ago, the government's Energy Administration Agency said, reports CNN.

According to Forbes, “The market is reacting to the tropical storm in the Gulf of Mexico which could affect platforms and refineries,” said Victor Shum, a partner with US energy consultancy Purvin and Gertz in Singapore.

“Coupled with the weather news is the inventory report showing a continuing gasoline drawdown which was larger than expected.It's now seven weeks in a row for gasoline so the two major news (items) really caused concerns in the market this morning.”

Shum said oil at 70 usd a barrel would not be surprising.

“Think heading to 70 usd at some point would not be surprising. I think the market sentiment is that at some point it will hit 70. It's a matter of time,” he said.

“The likelihood that there will be any damage to the oil and gas industry from this storm is absolutely minimal,” said Mike Armbruster, co-founder of Altavest Worldwide Trading Inc. in Laguna Hills, California. “There is no fundamental justification for this rally,'' he said. ``At $68 and above I'm a seller.”

Crude-oil supplies jumped 1.9 million barrels, the fourth- straight increase, to 322.9 million in the week ended Aug. 18, according to the report. Stockpiles are more than 10 percent higher than a year ago.

Distillate supplies, which include heating oil and diesel, rose by 1.43 million barrels, the 14th straight increase, informs Bloomberg.

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