July 29 (Bloomberg) -- Crude oil rose to its highest in more than two weeks after an explosion at BP Plc's Texas City, Texas, refinery, the third largest in the U.S., renewed concern that processing plants will struggle to meet surging demand for fuels.

BP today said it extinguished the fire resulting from yesterday's blast at a hydrotreating unit. All personnel at the refinery are accounted for, a spokesman said. The company also shut down two similar units as a precaution, he said. No new refineries have been built in the U.S. in almost 30 years.

The incident is a reminder that ``the global refining system is starting to break down,'' said Deborah White, an economist at Societe Generale SA in Paris. Plants ``have been pushed very hard in the past two years. The oil-products market is going to be very tight this winter,'' when demand peaks.

Crude oil for September jumped as much as 50 cents, or 0.8 percent, to $60.44 a barrel on the New York Mercantile Exchange, the highest since July 13. It was up 33 cents at 10:34 a.m. London time, less than $2 from the record of $62.10 a barrel reached on July 7. Prices have doubled in the past two years after averaging less than $19 from 1995 through 1999.

Next week, crude oil may rise for a third week on speculation higher demand for fuels in the U.S. and China will deplete stockpiles, a Bloomberg survey showed. Twenty-four of 48 analysts and strategists questioned, or 50 percent, said oil will gain next week. Sixteen, or 33 percent, said prices will fall and eight forecast little change.

Record Demand

Demand for oil is estimated to reach a record 85.9 million barrels a day in the fourth quarter according to the International Energy Agency. Crude prices have surged more than 80 percent since 2003 as rising demand, led by China and the U.S., has strained refiners' capacity to make fuels.

Prices have also been bolstered by increasing demand for fuels such as gasoline and diesel in developing economies such as India and Brazil.

Murphy Oil Corp. had a fire at its Mereaux, Louisiana, plant two days ago. The day before, Russia's OAO Novo-Ufimsky plant had a pipeline blast. Royal Dutch Shell Plc shut its Pernis refinery and chemicals plant in the Netherlands for four days earlier this month after a power cut.

``Events like this highlight the tightness of supply of energy commodities, and refined products in particular, given the insufficient U.S. refining capacity,'' said Dariusz Kowalczyk, senior investment strategist at CFC Securities Ltd. in Hong Kong.

Brent crude for September settlement added 34 cents, or 0.6 percent, to $59.10 on London's International Petroleum Exchange, the fifth increase in the past six trading sessions. It reached a record $60.70 a barrel, also on July 7.

Second Blast

Gasoline for August delivery surged as much as 7.8 cents, or 4.5 percent, to $1.80 a gallon on Nymex. It reached a record $1.86 on July 8.

The explosion was the second in about four months at the Texas City refinery, London-based BP's biggest. A blast in March killed 15 people and injured 170 others.

The fire was put out at 2:30 a.m. Houston time, BP spokesman Toby Odone said from London. Yesterday's explosion at the hydrotreating unit, which reduces sulfur content in fuel oil, occurred at about 6:30 p.m. Houston time, said Hugh Depland, another spokesman for London-based BP.

The closing of the other two units will limit the refinery's ability to produce some unspecified products, but its total output capacity of 460,000 barrels a day remains little changed from before the explosion, Odone said.

The Organization of Petroleum Exporting Countries, the source of about 40 percent of the world's oil, is pumping almost as much as it can to boost inventories before the fourth-quarter peak in consumption.

To contact the reporter on this story: Alejandro Barbajosa in London at abarbajosa@bloomberg.net

Last Updated: July 29, 2005 05:39 EDT