Crude oil prices set a new high of $65 US Wednesday, with fears about refinery problems and shrinking U.S. gasoline inventories driving the market.

The ongoing rise in crude oil prices which have risen 14 per cent in three weeks, shows the market is extremely nervous about threats to output.

However, analysts say the United States -- the world's largest oil and gas consumer -- has enough fuel in inventory to offset any regular supply disruption.

And while the $65 US price for light sweet crude -- a $1.93 US rise -- was the highest on the New York Merchantile Exchange since 1983, the price would have to exceed $90 US per barrel to top the inflation-adjusted peak price of 1980.

Still, oil prices are 40 per cent higher than they were one year ago.

Oil demand remains strong in the U.S. and China, one of the world's other top consuming nations, despite the rise in prices.

"People talked about $60 crude slowing economies around the world. But here in the U.S., (Federal Reserve Chairman) Alan Greenspan is telling us the economy is doing great and getting stronger," James Cordier, president of Liberty Trading Group in Tampa, Fla., told the Associated Press.

"It bodes well for crude testing the $70 range."

Although OPEC has pledged to pump more oil if needed to stabilize the price, the market doesn't take the promise very seriously.

OPEC only has about 1.5 million barrels per day in excess production. The type of oil it can produce -- sour crude -- isn't the first choice for making transportation fuels.

"The market was used to having four to five million barrels in spare capacity some 10 years ago and people would still like to have this cushion available, but this is not the case anymore,'' Manouchehr Takin, an analyst with the Center for Global Energy Studies in London, told AP.

The U.S. Dept. of Energy showed crude oil inventories are 10 per cent higher than they were a year ago, but gasoline inventories are down four per cent.

Gasoline consumption is up in the U.S. by about one per cent over this time last year.

While U.S. gasoline costs have jumped about 25 per cent in the past year, Canadian costs are up about 18 per cent.

The high oil prices mean pump prices in some rural parts of Newfoundland and Labrador to $1.11/litre, while in New Brunswick, gas was retailing for $1.04.

Prices in Montreal reached $1.08 and in Vancouver, some unhappy drivers were paying more than $1.09 for regular, up from 95.8 cents last week.

Analysts say there likely won't be a price fall until after Labour Day -- and even then, prices will be over 90 cents per litre.