The price of oil hit another high yesterday, closing above $47 a barrel as traders reacted to continuing concerns about supply disruptions from terrorism and instability in oil-producing countries.
Analysts said they expect prices to continue creeping up because of the combination of uncertainty and enormous demand.
"World growth is so strong and demand is so strong that we are using all the oil capacity we've got," said Bill O'Grady, director of futures research for A.G. Edwards & Sons Inc.
The closing price of benchmark U.S. crude oil for September delivery was $47.27, up 52 cents from the closing price on Tuesday. Adjusted for inflation, the price of crude oil remains well below its peak in 1982.
O'Grady said he expected prices to continue climbing unless an economic slowdown results in a drop in consumption. "It's probably going to go higher than people think," he said. Growth in demand has been heaviest in China and the United States, while production in many oil-producing countries is near capacity.
Analysts said events and data that normally would not have a significant impact on the market are helping to drive prices up while positive developments have had little effect.
"We have a market here that is pretty much determined to continue moving higher," said Peter Beutel, president of the energy consulting firm Cameron Hanover Inc., based in New Canaan, Conn. "It is really not paying close attention to anything that would drive prices lower and is paying attention almost exclusively to factors that would push the market higher."
Oil prices increased yesterday after the Department of Energy reported that U.S. crude oil inventories -- 293 million barrels -- dropped by 1.3 million barrels from the previous week. Even so, inventories are higher now than they were at this time last year.
Traders have been especially concerned about the possibility of disruptions to oil production, saying there would be little reserve capacity to make up any loss.
The threats include an ongoing dispute between the Russian government and Yukos Oil Co., the country's largest oil producer. In Iraq, there are continued concerns about attacks on oil pipelines. In Venezuela, where President Hugo Chavez survived a recall vote this week, traders remain concerned about instability.
Nationally and locally, the average price of regular gasoline increased slightly yesterday, according to a survey by a contractor for the AAA auto club, although it is lower than a month ago. The national average was $1.869 a gallon yesterday.
The price of gasoline has edged down as crude oil prices increased in recent weeks. The reason, analysts said, is that supplies of gasoline have remained high. They said prices could start to rise again but noted that the summer -- when demand is highest -- is nearing a close. That may mean that gas prices will not go significantly higher, they said.
However, prices of diesel fuel and heating oil have risen as demand has outstripped supply.