Oil prices pushed past $67 a barrel to another all-time high Wednesday, fueled by fresh supply concerns from an Atlantic storm and hobbled refineries.
But unlike many recent record-setting days, when some tangible event sparked the rise, the mere potential for bad news was enough to send the sensitive oil futures market soaring.
Slow-moving Tropical Storm Katrina might strike near Gulf of Mexico petroleum facilities or miss them entirely, analysts said. And accounts of refinery problems, including a downed hydrogen unit at a Northern California refinery, couldn't be confirmed but followed a government report of lower gasoline supplies.
"There really wasn't anything that happened today. Oil stocks seem ample. Some issues haunting the market late last week are gone, and most models do not have [Katrina] making any dent in offshore production," said Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, N.J. "But it was still kind of a typical day in the oil market."
The U.S. benchmark crude for October delivery closed at $67.32 a barrel, up $1.61 on the New York Mercantile Exchange. That eclipsed the previous record close of $66.86 on Aug. 12.
September natural gas futures jumped 30.1 cents to $9.984 per million British thermal units on Nymex, passing the previous record close of $9.978 per million BTU set Dec. 27, 2000. September gasoline futures rose 6.2 cents to $1.926 per gallon.
The Energy Department, in its weekly report on energy supplies, said domestic gasoline inventories tumbled 3.2 million barrels last week to 194.9 million barrels, while crude oil inventories rose 1.8 million barrels to 322.9 million barrels. Gasoline production fell by more than 100,000 barrels in the face of demand that is running 1.6% ahead of this time last year.
The inventory numbers suggest that "refineries are having more problems than may be known," the Energy Department said, adding that such difficul-ties could cause an extra-large inventory of crude oil to build that "should keep prices from being as high this coming winter as they might be."
Several analysts said potential problems in the refinery network affected Wednesday's trading.
The Oil Price Information Service cited unnamed sources as saying a hydrogen unit was out of commission at Shell Oil Co.'s refinery in Martinez, Calif., which boosted wholesale diesel and jet fuel prices in California. Shell didn't comment on the matter.
Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago, blamed Wednesday's price surge on a tripwire mentality and the fact that motorists continue to ignore high gasoline prices.
"The No. 1 reason is that demand for gasoline is continuing to rise. People have not changed their habits," Flynn said.
Traders also reacted to fears that the Atlantic hurricane season might produce another big storm. Hurricane Ivan last September was the third-most-expensive natural disaster in U.S. history.
"This is being driven by Katrina. There are 20 different models on where it will go. Some have it moving up the coast. Others have it hitting prime production areas," said Mike Fitzpatrick, vice president of energy risk management for Fimat USA Inc. in New York. "There is a lot of excess caution now because of the damage that was done by Ivan."
Despite the Energy Department's conjecture that prices might moderate later this year, many market watchers are betting oil will remain expensive.
Morgan Stanley raised its earnings forecasts Wednesday for five major oil companies -- Exxon Mobil Corp., ConocoPhillips, Marathon Oil Corp., Sunoco Inc. and Amerada Hess Corp. -- citing its continued belief in a "golden age of refining" as crude passed its previous record.
"Anyone who looked at the fundamentals and said the market is overvalued or relatively neutral and was bold enough to sell, even with reason on their side, has been spanked and spanked pretty heavily because there is money still rolling in on the buying side," analyst Kloza said. "It looks as though we still have another chapter in this book."