From Staff And Wire Reports
August 19, 2004

Oil prices keep rising because they can.

At least that's the way energy analysts and traders see the unabated rise in the price of crude, which closed above $47 a barrel Wednesday.

Experts see recent reports of continued growth in the economy and low inflation as signs that demand for oil, and therefore oil prices, can keep rising.

With exception of a "soft spot" in June and July, the high energy prices really haven't had that great an effect on the economy, said Bill Gilmer, senior economist with the Federal Reserve Bank of Dallas.

U.S. light, sweet crude set a record of $47.39 a barrel before easing to close at $47.27, up 52 cents on the day.

However, gasoline futures fell by 0.83 cent to $1.2972 per gallon.

Fresh threats by rebel militia in Iraq against oil facilities and a fall in U.S. crude stockpiles helped support prices.

U.S. crude oil has set all-time highs in all but one of the last 14 trading sessions and is up 27 percent since the end of June.

German Chancellor Gerhard Schroeder said that, while high prices were a concern, global growth remained strong.

"We don't currently see any negative impact from the oil price, and we still have very robust global growth," Schroeder said at a press conference in Berlin.

This idea began to show up in market discussions when the U.S. Commerce Department announced that consumer prices fell in July for the first time in eight months, indicating underlying inflation pressures are largely under control in the world's biggest oil importer.

"The economy overall is unaffected by oil prices at this high level. That suggests retail oil demand will continue to be healthy," said Tony Nunan, manager at Mitsubishi Corp. 's international petroleum business, in an interview with Reuters.

U.S. oil demand so far this year is up 3.4 percent, preventing inventories from building much as rising consumption soaks up extra imports from OPEC suppliers like Saudi Arabia.

U.S. Energy Information Administration inventory data for the week that ended Friday estimated commercial crude stocks fell 1.3 million barrels to 293 million, the third week in a row that inventories have fallen.

The report showed that higher prices haven't stifled driving during the end of the summer driving season.

In other New York trading Wednesday, heating oil futures rose 0.31 cent to $1.225 per gallon.

Natural gas rose by 0.9 cent to $5.382 per thousand cubic feet.