Crude Keeps Running

Updated from 12:45 p.m. EDT

Oil stormed ever higher Friday, edging closer to $67 a barrel, as bulls capitalized on fears about the adequacy of existing energy supplies.

September crude vaulted $1.06 to $66.86 a barrel on Nymex, a new record close, surpassing the $65.80 mark set a day earlier. Crude closed at record highs every day except Tuesday this week, adding $4.55 over the five sessions.

Gasoline futures also surged to a new record above $2 a gallon Friday.

Concerns about supplies of both crude oil and refined products like gasoline continued to whip up the market. In the latest of a series of refinery, Premcor's(PCO Quote) 180,000-barrel-a-day refinery in Memphis went out overnight and reportedly remains shut.

Refinery outages resulted in the sixth straight drop in U.S. gasoline inventories last week. Crude and distillate inventories rose.

In a report Thursday, the International Energy Agency, a consultancy that advised oil-producing nations, noted that worldwide crude inventories were ample, at 54 days of forward cover, which is two days higher than last year.

Natural gas inventories rose by a smaller-than-expected 43 billion cubic feet last week, spurring a rally in natural gas prices on Thursday.

"People were expecting the record high power consumption seen over the past hot weeks to come off a little, but consumption stayed at record highs," said Steven Smith, an energy adviser who tracks the weekly gas storage data.

Natural gas hit a record of $10 per thousand cubic feet in March of 2003. On Thursday, prices reached $9.33 per thousand cubic feet.

"Underlying the oil theme still is the tension between U.S. and Iran," said Randy Diamond, a trader at Miller Tabak & Co. "This is a longer-term issue, unlike the refinery issues, and threatens to keep the price of oil high."

Many analysts, however, hold the believe that above refining capacity and natural gas prices, increased speculative trading by hedge funds is fueling the surge in oil prices.

Among energy stocks, ConocoPhillips(COP Quote) fell 1%, BP(BP Quote) slipped 0.2%, Exxon Mobil(XOM Quote) lost 0.3%, and Chevron(CVX Quote) dropped 0.2%.

Cheniere Energy(LNG Quote) fell 1.8% after it said on Thursday that a Securities and Exchange Commission investigation related to the company's agreements and negotiations with Chevron and its December 2004 stock offering has become a formal probe.

In earnings news Petrohawk Energy(HAWK Quote) said it lost $2.3 million, or 6 cents a share, in the second quarter, compared with a loss of $1.5 million, or 16 cents a share, a year ago. The independent oil and gas company produced an average of 56.5 million cubic feet of equivalents a day in the second quarter, compared with 8.7 million a day a year ago. Shares fell 2.1% to $11.01.

Elsewhere, Unocal(UCL Quote) was raised to an AA rating from BBB+ by Fitch Ratings. The agency said the senior unsecured debt upgrade came following Unocal's acquisition by Chevron.