Oil: Prices soar to record near $58 on spike alert

NEW YORK - Oil prices surged to a record near $58 a barrel on Friday, powered by a forecast the market could spike above $100 due to robust global demand and tight spare capacity.

Prices have climbed around 30 per cent this year, with big-money speculative funds buying heavily on signs that rapid demand growth in Asia's emerging economies and the United States would strain world supply.

US light crude rose $2.40 to $57.70 a barrel, breaking the previous peak of $57.60 hit March 17. London's Brent crude climbed $2.22 to $56.51.

US petrol futures for May hit a record $1.7360 a gallon on worries that a national stockpile surplus could dwindle ahead of driving season, while heating oil futures struck a peak of $1.6750 a gallon.

Top energy derivatives trader Goldman Sachs said in a report on Thursday the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.

"That was a pretty big call by them and the market is just assessing where supply and demand really sits," said David de Garis, senior economist at ANZ Investment Bank in Melbourne.

"In a very interesting report, Goldman talked about how we might see a longer cycle and a higher cycle than we have seen in a very long time," said Deborah White, senior economist at SG Commodities.

Goldman Sachs raised its 2005 and 2006 price forecasts for US light crude to $50 and $55, respectively, from $41 and $40, citing resilient oil demand growth.

Prices rallied 2.6 per cent on Thursday on the back of the report and also on concerns about the adequacy of US petrol stocks ahead of the peak summer demand season.

PETROL SUPPLY ANXIETY

Production problems over the past week have deepened concerns over whether refiners will be able to meet petrol demand this summer.

A 485,000-barrel-per-day (bpd) refinery in Venezuela -- the world's fifth-biggest oil exporter and a top supplier of crude and oil products to the United States -- was shut down on Thursday by a power failure.

State oil company PDVSA said it aimed to resume full operations at the Amuay refinery in seven days at the latest and that supply to local and international markets was guaranteed.

A fatal explosion last week at BP Plc's Texas City refinery, the third-largest in the US, also unnerved the market, along with problems at several petrol-producing units.

For the past month, US petrol demand has been 2 per cent higher than the same time a year ago, despite record pump prices.

The US Energy Information Administration (EIA) reported on Wednesday petrol stocks fell 2.9 million barrels to 214.4 million barrels last week, the fourth decline in a row.

- REUTERS