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. Last Updated: 07/27/2016

Rising Oil Prices Hit a Record High

SINGAPORE -- Crude oil futures hit a record high Monday, reaching $59.23 per barrel in Asian trading on concerns that demand will outpace refineries' ability to produce diesel and gasoline in the second half of the year.

Nymex crude for the July contract reached the mark early afternoon in Singapore, a rise of 76 cents from Friday's close, the second straight day oil has set intraday records.

Heating oil, meanwhile, rose more than a cent to $1.6725 per gallon, while unleaded gas futures were also up a cent to $1.666 per gallon Monday. On London's International Petroleum Exchange, Brent crude for July delivery leapt 77 cents to $58.53 per barrel.

On Friday, crude climbed as high as $58.60 per barrel before settling at $58.47, an increase of $1.89 on the New York Mercantile Exchange. That topped the exchange's previous intraday high of $58.28, set on April 4.

While Nymex oil futures are more than 50 percent higher than a year ago, they are still well below the inflation-adjusted high of over $90 a barrel set in 1980.

The Organization of Petroleum Exporting Countries failed to soothe the market last week when it agreed to raise its daily output quota to 28 million bpd. Including Iraq, which is not bound by the 11-member cartel's quota system, OPEC is pumping close to 30 million bpd, or about 35 percent of global demand.

Analysts said that, unlike last year's crude futures' record highs, which were driven largely by concern over geopolitical events in oil-producing countries such as Nigeria, Saudi Arabia, Iraq and Venezuela, this year's upward trend had more to do with speculative buying, continued supply fears and limited excess production capacity.

"This year we've had a confluence of factors driving up this rally: First, more hedge funds are allocating money to the red-hot oil markets; second, demand is outstripping supply; and third, capacity is tight in refineries and OPEC production facilities," said Victor Shum, energy analyst at Texas-headquartered Purvin & Getz.

Analysts also said demand for distillates in the summer -- gasoline for vacationing Americans and diesel for generators of small businesses in China when power shortages occur -- continued to keep the market on edge.

Analysts are also concerned that aging U.S. refineries will be unable to cope when demand peaks later in the year for winter production of heating oil, diesel and jet fuel.

Yet, Daniel Hynes, an energy analyst at ANZ Bank, also said crude's rise was partly a reaction to the kidnapping of the two German and four Nigerian Royal Dutch/Shell subcontractors who had been seized by gunmen on Wednesday. They were released Saturday.

"The high crude prices are certainly a reaction to the unrest in Nigeria, and the effects of Western counties removing embassy staff there," said Hynes. "Supply is so tight now that any possibility of supply being halted or constrained has driven up prices over the last couple of days."

Nigeria exports some 2.5 million bpd, making it the world's seventh-leading exporter and the fifth-biggest source of U.S. oil imports.