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Oil Prices Hit New High

NEW YORK -- Crude oil in New York surged to a record $65 per barrel as refinery shutdowns and rising demand cut fuel inventories for the sixth straight week, the Arizona Daily Star reported. Gasoline and heating-oil futures also touched all-time highs.

The markets responded in part to a weekly U.S. Energy Department report on gasoline consumption, which was up 1.4 percent for the four weeks that ended Friday compared with the same period a year earlier. Gasoline supplies fell 2.1 million barrels to 203.1 million barrels last week.

"At the retail level, we haven't seen a slackening in demand," said Jeff Lenard, a spokesman for the National Association of Convenience Stores (NACS).

Oil analyst Subash Chandra, of Morgan Keegan Inc. in New York, said that means prices will keep rising.

"We haven't seen demand respond to higher prices yet," Chandra said. "We are following the normal law of economics. Prices will rise until we choke demand off to meet falling supply."

Crude oil for September delivery surged $1.83, or 2.9 percent, to close at $64.90 per barrel on the New York Mercantile Exchange. Futures touched $65 per barrel minutes before floor trading ended.

While oil prices are about 46 percent higher than a year ago, they would need to surpass $90 per barrel to exceed the inflation-adjusted peak set in 1980, the report stated.

The U.S. average pump price for gasoline rose 2.2 cents to a record $2.376 a gallon Wednesday, according to the AAA, the former American Automobile Association. Prices are up 27 percent from a year earlier.
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