Crude-oil prices soared near a record $67 a barrel on Friday as U.S. refinery outages looked set to test gasoline supplies in the world’s biggest-consuming nation.

The threat of hurricanes in the Gulf of Mexico and concerns over Iran’s decision to resume uranium-conversion activities also fueled the price increase, analysts said.

But some traders said purely speculative buying was a big factor behind the $10 per barrel surge in just over three weeks.

“This is a bubble that will have to burst at some point,” said Mike Fitzpatrick, an oil broker at Fimat USA in New York. A large increase in supply or a noticeable dropoff in demand will be needed to end the buying frenzy, he said.

Light sweet crude for September delivery gained $1.10 to $66.90 in midday trade on the New York Mercantile Exchange. On Thursday, oil prices settled at $65.80 a barrel, the highest close since Nymex trading began in 1983. On July 20, prices settled at $56.72.

Oil prices are 46 percent higher than a year ago, but they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.

Gasoline futures climbed as high as $2 a gallon, another nominal record, before retreating slightly to $1.995 a gallon, an increase of 4.52 cents. Heating oil futures rose 2.45 cent to $1.923 a gallon.

In London, Brent crude for September delivery was trading at $65.94 a barrel, up 56 cents.

Tropical Storm Irene was expected to intensify Friday and possibly reach hurricane strength as it approached the U.S. East Coast, forecasters said.

Irene’s potential threat to land was still uncertain, as its path had shifted east, according to forecasters at the National Hurricane Center in Miami. Forecasters said the storm could strike the coast anywhere from South Carolina to New Jersey.

With bullish sentiment unabated and crude prices hitting consecutive highs this week, analysts expect front-month crude contracts to test the $70 a barrel threshold.

Iran’s nuclear program has drawn criticism from the West. The country is the No. 2 producer in the Organization of the Petroleum Exporting Countries, which produces roughly a third of the world’s oil.

Analysts said gasoline demand, currently at its peak in the U.S. summer driving season, was pushing crude’s gains. Last week, U.S. gasoline demand picked up by 1.4 percent from a year ago, according to government data.

Coupled with new reports of refinery outages this week, traders fear U.S. refiners, already running at 95 percent of capacity, are straining to satisfy the rising demand.

“People fear there won’t be enough gasoline at a time when it’s so greatly demanded, so they’re just buying, buying and buying,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

The U.S. Energy Department said Wednesday that gasoline inventories fell 2.1 million barrels to 203.1 million barrels last week.

“The refinery breakdowns are a big issue; they’re happening at a time when gasoline supplies are already very tight,” Emori said.

Among the latest refinery outages: several units at ConocoPhillips’ 306,000 barrel-a-day Wood River, Ill., refinery were shut after a thunderstorm caused a power failure at the plant, while Premcor Inc.’s 190,000-barrel-a-day refinery in Memphis, Tenn., was shut due to a power outage.

Also, BP PLC shut down a hydrogen-recovery unit Aug. 10 at its massive 470,000 barrel-a-day Texas City refinery, following a decision by the company to keep high-pressure units off line until they can be proven safe, BP spokesman Scott Dean said Thursday.

The three other high-pressure units at the refinery were already off line Wednesday and will be kept down pending investigations, Dean said.

The incidents are the latest in a string of outages to hit about a dozen U.S. refineries that together can process 2.7 million barrels a day of crude oil, some 16 percent of total U.S. refining capacity.

Associated Press Writer Gillian Wong in Singapore contributed to this report.

AP-ES-08-12-05 1326EDT

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