Oil closed above $55 a barrel yesterday for the first time as traders worried about low stockpiles of heating oil and strong economic growth in China.
Consumers are increasingly feeling the gains at the gas pump, where prices have been on a slow rise and are just below a record set in May. Heating oil and diesel fuel prices also are at record levels.
Oil prices continue to climb because of strong worldwide demand, particularly in China, which released data yesterday showing its economy grew at 9.1 percent in the third quarter, faster than many analysts expected. The world is pumping oil at near capacity, and traders are concerned that any disruption could cause supply problems.
U.S. benchmark crude oil for December delivery closed at $55.17 a barrel on the New York Mercantile Exchange, up 70 cents from the day before. Earlier in the week, prices had eased slightly before quickly reversing course. Several analysts said they expected prices to approach $60 a barrel soon.
"It seems like it's just an animal that won't be stopped," said Mario Chavez, an energy broker for ABN AMRO in New York. "It's continuing to head higher and higher and nobody's stopping it."
Rising oil prices helped depress stocks yesterday, with the Dow Jones industrial average falling nearly 108 points.
Analysts disagree about the likely economic effects of oil prices. Some see a growing risk of another recession, or at least a pronounced slump, if sustained high oil prices cause consumers and businesses to pull back on spending.
Increases in prices in recent months have inflicted "a significant shock to the economic system," Federal Reserve Board member Ben S. Bernanke said in a speech Thursday.
But some analysts are less worried, noting that the economy is far more fuel efficient than in past decades, when oil-price spikes frequently preceded recessions. In inflation-adjusted dollars, oil reached its peak price in 1981.
At the gas pump, diesel hit $2.21 yesterday, according to a AAA auto club survey. A gallon of regular gasoline was about $2.02 Analysts said they expected diesel and gasoline prices to continue increasing.
Heating oil closed yesterday at $1.59 a gallon. Consumers filling their tanks for the start of the winter heating season have been hit with bills that are typically far higher than last year's.
U.S. stockpiles of distillates, which include heating oil and diesel fuel, were below the level of a year ago, according to data released this week from the Energy Information Administration, an arm of the Energy Department. Traders said yesterday that there was concern about whether inventories would meet demand if this winter is unusually cold.
U.S. refiners have not been producing their usual levels of heating oil, analysts said, because of disruptions caused by Hurricane Ivan last month. Oil production in the Gulf of Mexico continues to be lower than normal.
Bill O'Grady, an analyst for A.G. Edwards & Sons Inc. in St. Louis, called yesterday "just kind of another day on the bull market."
He said that for oil prices to come down, worldwide demand needs to slow. Analysts had expected a more significant decline in China's economic growth than actually occurred, O'Grady said.
"There is no landing," he said of China. "The economy is still growing robustly."
Traders said that in recent days, more speculators have been buying oil, pushing prices higher.
At the mercantile exchange, traders said many people wanted to buy oil and few wanted to sell.
"When you get down there on the floor to sell something, everyone wants to buy it," said Heather Bergeron, an energy trader for Prudential in New York. "You've got too many fundamental reasons and too much fear in the market right now."
Staff writer Nell Henderson contributed to this report.