Gas Prices Set Record, Oil Edges Up
By Adam Schreck
The Associated Press
Friday 11 April 2008
New York - U.S. retail gas and diesel prices jumped to yet another record Friday, piling on the costs for motorists as well as consumers reliant on trucks, trains and ships to deliver goods to market.
Oil prices also edged higher after trading lower for much of the day, but remained more than $2 below an all-time high set earlier in the week. Light, sweet crude for May delivery rose 3 cents to settle at $110.14 on the New York Mercantile Exchange.
Gas prices at the pump added 0.8 cent to $3.365 a gallon, according to AAA and the Oil Price Information Service. The increase marks the latest in a series of records in recent weeks, and leaves drivers paying 56 cents more a gallon now than they did a year ago.
Analysts expect gasoline prices may move even higher as more drivers take to the roads as summer approaches and refineries complete their conversion to more expensive summer-grade fuel. It is unclear how far prices will go, however, because a bigger fuel bill could convince some drivers to cut back.
"I still do not believe there's enough strength in demand that it's going to justify that move to $4 a gallon," said Tom Kloza of the Oil Price Information Service in Wall, N.J.
Retail diesel prices rose 2.1 cents to $4.066, topping the previous high set a day earlier. The spike in the key transportation fuel is significant because it affects the cost of a wide range of goods - meaning that even Americans who don't drive will feel the pinch.
"There's just not enough supply to meet demand ... and that's driving prices higher," Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill., said of diesel's surge.
An unexpected decline in U.S. crude and gasoline inventories drove oil prices to a trading record of $112.21 a barrel on Wednesday amid concerns about inadequate supplies. Prices fell Thursday.
Ritterbusch attributed the tepid performance later in the week to traders looking to lock in their gains from strong prices before the weekend.
"The main thing I see is just profit-taking after we ran things up to a record high," he said. "There's a strong possibility we'll see new record highs again next week."
Crude prices also came under pressure most of the day Friday after the International Energy Agency lowered its global oil demand forecast for the year by 310,000 barrels a day to 87.2 million barrels a day, citing lower economic output expectations in the U.S. and elsewhere.
"The suspicion is it's not just the U.S. that's going to see a slowdown," Kloza said. "I think it's significant, but I also think the would-be sellers ... are probably not yet convinced."
The U.S. dollar strengthened against the euro and the pound, also putting pressure on oil prices for much of the session.
Crude oil's recent run above $100 a barrel has been largely attributed to the steadily depreciating U.S. currency. A weakening dollar attracts investors to commodities as a hedge against inflation, but when the dollar rises, the effect tends to reverse as oil also becomes more expensive to investors overseas.
More negative U.S. economic data also appeared to have taken steam out of oil's precipitous price rise this week. The Commerce Department reported the first decline in oil imports in a year - a possible sign that high prices and an economic downturn were hurting crude sales.
In other Nymex trading Friday, heating oil futures rose 0.35 cent to settle at $3.1975 a gallon, while gasoline futures rose by 1.52 cents to settle at $2.8073 a gallon. Natural gas futures slipped by 20.9 cents to $9.889 per 1,000 cubic feet.
In London, Brent crude futures rose 74 cents to $108.94 a barrel on the ICE Futures exchange.
Associated Press Writer George Jahn in Vienna contributed to this report.