Oil prices made fresh gains above $55 a barrel on Monday led by record-breaking heating oil prices on fears of a winter supply crunch. U.S. light crude hit a new peak at $55.33 a barrel before easing to $54.93, down five cents, for a gain of 67 percent since the start of the year. U.S. heating oil set a record $1.5555 a gallon before dipping to $1.5485 and Brent crude in London matched an all-time high at $50.40 a barrel before slipping to $49.92, down one cent. Prices have continued their relentless march higher despite some evidence that energy costs are beginning to slow the economic growth that has helped fuel more than a $20 increase in prices this year. "At the moment, we are at the stage where prices are really driven by short-term factors that the market has been dealing with for the last few months," said Daniel Hynes, industry analyst at ANZ Bank in Melbourne. "If high prices do continue much longer, they will certainly have a bite on GDP growth." U.S. Federal Reserve Chairman Alan Greenspan said on Friday that high prices had already cut 3/4 of a percent from U.S. gross domestic product. "So far this year, the rise in the value of imported oil -- essentially a tax on U.S. residents -- has amounted to about 3/4 percent of GDP," said Greenspan. "The risk of more serious negative consequences would intensify if oil prices were to move materially higher," he said.
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Oil's latest surge higher, adding more than $11 since mid-September, has been spurred by an outage in U.S. Gulf production after pipeline and platform damage from September's Hurricane Ivan. Gulf of Mexico output is operating at 73 percent of its normal rate of 1.7 million barrels per day. Some fields are expected to remain shut beyond the end of the year, the U.S. government's resource agency said last week. The shortfall has limited refiners' ability to build up U.S. heating oil stocks, which at 50 million barrels are 10 percent below last year, weekly government data showed last week. Heating oil supplies in the U.S. Central Atlantic region, a major distribution point for the heavy consuming U.S. Northeast, are running well below average. The shortage is also seen in other major regions, with consumers in Germany, Europe's biggest market, keeping supplies of heating oil well below last year due to high prices. Kerosene supplies in Japan, the world's third-biggest energy user, are more than 15 percent below last year. The shutdown of two secondary units at top Japanese refiner Nippon Oil Corp. <5001.T> following a fire on Saturday sparked concerns that Japan's kerosene shortfall could worsen as winter approaches. A Nippon Oil spokesman said the stoppages did not directly affect kerosene output, but since the company had to lower overall refining rates, it "will take any possible measures to keep kerosene supply stable."///www.reuters.com ///