Concerns about the ability of US refineries to meet petroleum demand boosted US gasoline futures towards the $2 a gallon level on Tuesday, which in turn helped push oil futures towards record highs.
A string of unplanned maintenance work at US refineries this summer has thrown the spotlight on the refining industry and whether the system is straining under the workload caused by operating near capacity to keep pace with demand.
September Nymex gasoline prices hit a high of $2.0120 a gallon before easing to $1.9870, a gain of 2.49 cents on the day. This still gave US refiners a gross profit margin of more than $17 on each barrel of petrol produced.
The rise in US gasoline futures sent September WTI futures to a high of $66.85 a barrel, and within sight of the record of $67.10 reached last Friday. The front-month contract later eased to $66.25, down 2 cents on the previous close, in early afternoon trade in New York.
WTI crude contracts for delivery this winter and next spring hit new records, with January WTI crude hitting $68.50 a barrel, the highest level for any WTI contract.
IPE Brent crude for September delivery gained 12 cents to $65.70 a barrel, having hit a high of $65.92 earlier in the session. With the September Brent contract expiring at the close of trade on Tuesday more trading volume was seen in the October Brent contract, which gained 4 cents to $65.50 a barrel.
Traders said the oil price could rally on Wednesday with the release of the latest US weekly inventory report. Wednesday sees the expiry of the September WTI options. Traders said there were a lot of funds tied up in the $70 a barrel call option, which is the option to buy, and the $65 call option.
“The market normally gravitates to where there is the most interest in the options, so at the moment it is going to be anywhere between $65 and $70,” one New York trader said.
The weekly report is expected to show another decline in US petrol stockpiles.
“The market wants to rally and is prepared to see anything as bullish and if they see bullish numbers then this market will rally hard towards $70,” the New York trader said.
Copper prices struck another record high on tight inventories.
The three-month copper price peaked at $3,662 a tonne on the London Metal Exchange, before closing at $3,659 in open outcry trade, up $28 on the day.
Gold gained more than $3 to $445.00/$445.80 a troy ounce in late London trade. Gold traders said the metal was finding good support at these levels and might reach the $450 within the next week.
