Gas tops $3.83 as early holiday travelers hit road

NEW YORK — Americans getting an early start on the Memorial Day weekend found that gasoline prices again sprinted to a new record high overnight, reaching a national average above $3.83 a gallon. Some analysts predict gas will break past $4 as early as next week.

Oil prices, meanwhile, fell Thursday after setting a new trading record of $135.09 overnight. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.

Oil's surge is contributing directly to the pain consumers feel every time they fill up. At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.831, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.

Unlike last year, oil prices are setting new record highs on a daily basis. That's pushing gas prices higher, and analysts see no reason for gas not to follow.

"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Prices may rise as high as $3.90 on a national basis by this weekend, he said. Prices are already above $4 a gallon at many stations around the country, and are averaging more than $4 in California, New York and Illinois, among other states.

Oil prices rose to $135.09 a barrel in overnight electronic trading on the New York Mercantile Exchange before retreating to settle down $2.36 at $130.81 a barrel by afternoon in New York.

Analysts said oil futures are caught between the supply and demand concerns that boosted crude to its latest record, and a desire by some investors to cash in some profits. The dollar, one of the factors that has fed oil's rally from about $65 a year ago, strengthened against the euro Thursday. When the greenback gains ground, commodities such as oil lose their value as hedges against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.

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At times in a price runup that's added nearly $9 to a price of crude this week, and almost $16 over the past month, investors will sell to take profits, analysts said. Crude rose $4.19 a barrel on Wednesday alone.

The Paris-based International Energy Agency on Thursday said it is worried about whether there is enough oil to meet global demand, and is working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely-watched forecasts.

"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week's earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.

Still, many analysts argue that oil prices have risen far beyond levels that can be justified by supply and demand. This school of thought believes the dollar's decline has attracted speculators to oil and other commodities, artificially inflating prices. Some analysts see signs in the prices differences between the current July crude contract and contracts for delivery in future months that could mean oil prices are set to decline in coming months.

In other Nymex trading Thursday, June heating oil futures rose 4.59 cents to settle at a record $3.9543 a gallon after earlier rising to a trading record of $4.0153. Heating oil, which is closely related to diesel, is often traded as a proxy for diesel.

June gasoline futures fell 6.68 cents to settle at $3.3297 a gallon after rising earlier to their own trading record of $3.438. June natural gas futures rose 5.7 cents to settle at $11.697 per 1,000 cubic feet. The Energy Department said natural gas inventories rose last week by 85 billion cubic feet, in line with analyst estimates.

In London, July Brent crude futures fell $2.19 to settle at $130.51 a barrel on the ICE Futures Exchange.

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Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.

Comments

[Chavez08]

Serious Question:

Is Capitalism good for America?

[williamina]

absolutely,
for moonbats not so much

[Paul]

Capitalism is good for people with lots of capital. The top 1% in income have increased their wealth dramatically in the last 20 years.

For the rest of us, we are treading water or going backward.

Socialism is the way forward. The economy in a socialist state is run for the benefit of the people, not just those with the capital.

Look at life in W. Europe and look at the US.

Its not even close anymore.

[sher2x4]

It's over.
The greed gene has won.
They won our minds.
In the last fifty years,
we have suffered more
from the hands of our own people.


The enemy is already inside the castle walls.

[DickTater]

Exactly. Looking at their pics at the top of this article, what I thought was....AmericanAQ. Our own slimey-white, MonstersOfGreed who view america as THEIR own 40 acres and we're just sharecroppers.

In fact, they farm us. They mine us. They breed us almost. They feed us flouride in the water and hormones in the food and antibiotics and anti-psychotics.

What kind of american company makes it's living from destroying the earth and financially strangling it's own fellow citizens? This is not unintentional. What are their meetings about? If this is what their tactics are like, I can only imagine what their MasterPlan must be.

The First CEO President. America needs to be run like a business.
Well, if you mean like Corporate America...then We've Got It! Just like a Corporation, our govt. is now EXPERT at ripping off the american coffers and funneling it all right into corpo pockets.
Our govt. has now got us all kneeling and actually paying top dollar so we can be brainwashed (cable and network TV) and tracked (Cell Phones, Internet) and our CorproMedia is blaring propaganda 24/7. Dissent is stifled. Truth is silenced.
Just like a top Fortune 500 corpo!

[TxAggie]

Dick- you are watching too many Steven Seagall movies and you swallowed There Will Be Blood hook line and sinker.

I work in the oil patch, have done do for 27 years. We do not rape the earth, we are damn eco friendly and we do our best to deliver a clean, stable product that all americans need. The politicians are the ones that screw it up with their spineless lack of a fair, predictable energy policy.

You are really paranoid aren't you? have you considered counseling?

[Chavez08]

If we (the people) made a deal with Russia , Brazil or Venezuela, there's a damn good chance they would sell it to us under the table at $50/bbl. Some of it's heavy but we can outsource the refinement for cheap.

It's time to make the market truly "Free", isn't it? Let's start "tossing" this f***ing "tea".

[Hare]

I'll talk to the man myself. I have connections

[dadw5boys]

If they don't get the large Instutitiional Investors out of the Futures Market there is not end. Oil will hit $250 a barrel at this rate by November.

Stop the SWAP !!!!

Don't allow investor to SWAP Futures and increase their values that is no different than waht Enron was doing. Raising the price without ever selling the Contracts or money changing hands!

[thegreatgiginthesky]

I saw an interview that CNN did with a Shell Oil Exec a few weeks ago. He claimed that the price of oil will stabilize once it hits $6.50

[zizyphus]

I agree with Dadw5boys about the $250 a barrel by November.

As long as the futures traders, investment banks, can make money off betting that oil will keep going up, the price will continue to go up. As long as the Saudis and Texas oilmen are making a killing, it will go up.

The question is, how long can our economy survive in this climate? How much business will be happening when consumers are paying ten bucks a gallon for gas?

[CookieWrites]

The oil companies have sold out our country for the sake for personal wealth.

[MilwaukeeDan]

CW, "The ______ companies have sold out our country........", you can play fill in the blank with your statement. As Spudlow would say, "free market capitalism", isn't it great(sarcasm).

[Chavez08]

Neoliberalism: Welcome to the era of slavery.

Those who had apathy for those hurt by the "Free Market" a year ago (saying "Well, they should have....") are humming a totally different tune now.

Isn't time to do some serious soul-searching and ask ourselves: "Is this Capitalist system really good for America?"

[Chavez08]

...and what we need is a Simon Wiesenthal to hunt down treasonous politicians, investors and CEOs when the people take back the government. It's time to wipe that arrogant smirk off of Cheneys' face.

Better make some room at the Hague.

[williamina]

wierd

[RegularFolk]

At what point are you going to Blame Congress. They are demanding OPEC produce more Oil but they will not allow us to produce more oil. Bunch of hypocrites that have not a clue what to do until they are lobbied with free gifts. Here is congresses answer. lets look really good by dragging some CEO in front of the camera and berate them so the stupid people think we are doing something about it.

[vippy]

I am so sick of the "Supply and Demand Problem" and the weakening dollar excuse. Please
write to your congressman regarding HR 5660, the Commodities Futures Modernization Act of 2000,
which was written by Wall Street Lawyers, 242 pages, and then quietly was added another 11,000
page appropriations bill, which created the ENRON Loophole. The power behind was Tom DeLay
and his wife. This legislation ties it directly to the mortgage meltdown and to the high energy price
of today. Congress knows this but does NOTHING! The same regulation (deregulating energy)
deregulated something called collateralized debt obligations (CDOs) is responsible for this meltdown.

[RoloTomassi]

Dude, you've sold me; I did a little research via google, and found this:

"There’s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self fulfilling prophecy." — National Gas Week, Sept. 5, 2005

Full story here:

http://www.star-telegram.com/ed_wallace/story/651928.html

[thegreatgiginthesky]

The idea that somehow global consumption has skyrocketed suddenly is a bullshit statement. If global consumption was increasing we'd see a steady creeping up of the price not just going up $5 a day.