oil tops $71 a barrel

[almaty 19]

Oil prices hit a new intraday high above $71 a barrel Tuesday a day after settling above $70 a barrel at the close of commodities trading in New York for the first time.

Light, sweet crude for May delivery surpassed the previous record of $70.85 a barrel in Asian electronic trading on the New York Mercantile Exchange, before easing back to $70.75. That's up 35 cents from Monday, when the contract settled at $70.40 a barrel, a record close.

In London, Brent crude for June delivery at the ICE Futures exchange also hit an all-time high of $72.20 a barrel, before easing back to $71.73 — a 27 cent increase from Monday's close.

Gasoline futures Tuesday rose 5.53 cents to $2.25 a gallon while heating oil prices gained 0.11 cents to $2.0240 a gallon. Natural gas futures rose 21.3 cents to $7.79 per 1,000 cubic feet.

With gasoline prices averaging $2.79 a gallon, President Bush said Tuesday he is "concerned" about the effect crude prices are having on American families and small businesses.

"We will feel real pain at the pump before this market tops out," said James Cordier, president of Liberty Trading in Tampa, who predicted prices could rise as high as $3.50 a gallon in some parts of the country this summer.

So far, demand for gasoline continues to rise, albeit at a slower pace, according to Energy Department data.

Crude prices ignored a report from OPEC forecasting weakening global demand.

In its latest monthly report, the Organization of Petroleum Exporting Countries on Tuesday revised its demand-growth forecast for 2006 to 1.42 million barrels a day, down from 1.46 million barrels per day in the previous report. The cartel estimates that global crude-oil demand will be slightly above 84.5 million barrels per day — about half a million barrels per day lower than the current Wall Street consensus.

OPEC expressed particular concern about the effect rising interest rates would have on consumer spending in the U.S., where gasoline demand grew at a slower rate in the first quarter and could "carry over into the second half of the year."

Still, analysts said oil prices were likely to climb further as long as geopolitical risks in Iran and Nigeria posed threats to supply.

Fear of war with oil-exporter Iran over its nuclear plans was widely cited as being behind the jump in oil prices. Iran said it will continue plans to enrich uranium for commercial power generators. The U.S. and other countries fear that Iran will use uranium for atomic weapons.

And in Nigeria, militant attacks have led to the stoppage of more than 25% of the country's crude oil production.

Monday's price in New York was $70.40 for a barrel of benchmark light, sweet crude oil for May delivery. That's up $1.08 from Thursday. (The commodities exchange was closed on Good Friday.) It's 59 cents more than the previous peak closing price of $69.81 hit Aug. 30.

The Monday high is not a record if inflation is taken into account. That peak is the equivalent of $86.99 in today's dollars, set when oil was $38.85 a barrel in January 1981, according to the U.S. Energy Information Administration.

"The question now is, 'Where does it end?' " Tom Kloza, analyst at Oil Price Information Service, said Monday.

Gasoline is made from oil, and the price of oil accounts for roughly 60% of the price of gasoline. But the two aren't in lock-step. Wholesale gasoline prices — harbinger of what motorists pay at the pump — already are more than oil. Wholesale gasoline was the equivalent of $91 to $96 a barrel Monday, Kloza said.

"There's a fascination with crude oil, but people don't burn crude. They burn gasoline and diesel," Kloza said. He calculated that motorists are spending $212 million more a day on gas than they were a year ago and $80 million more on diesel.

"There's not as much cushion to offset the blow" of higher energy prices, National City chief economist Richard DeKaser said Monday. He said rising interest rates are eliminating mortgage refinancing as a major source of cash, and big tax cuts aren't foreseen. Consumer spending is more than two-thirds of U.S. economic activity. The more that people pay for fuel, the less they can spend to keep the economy growing.

Kloza forecasts a peak nationwide average price just short of $3 by May 6 and as much as $1 less by Thanksgiving as demand slows. EIA reported a nationwide average $2.783 Monday, up 10 cents in a week and up 54.6 cents in a year.

[Jenn! 918]

Alright! I love it when new records get set!

[cmartyn 0]

Yay!

Id love to see an early end to the summer driving season. People will have left over money to buy cheap plastic ####### at Wal-Mart instead.

[almaty 19]

yeap, wal-mart be selling allot of bikes this summer

[rclouse 0]

Actually, I'm in favor of the high price for oil. Why? It makes alternatives like oil shale and tar sands economically viable. Most of the tar sands in the world are in Canada and Venezuela, and most of the oil shale in the world is right here in the US. So, the price of gas might stay high, but we can stop buying oil from unsavory places like Saudi Arabia, and by extension stop financing Wahabi Islam and terrorism.

[Tiksman 0]

Damm gas prices.. SUCKKKKK

[peejay 327]

It's probably a good time to make a sweet deal on a new Hummer or any other gas hog right now. Americans have always been fat and sassy when it comes to driving gas thirsty land barges. This latest round of record prices will separate the rich men from the poor boys.

Even $$$ won't help if the gas shortages of the 1970's rear their dirty little heads. You can't drive far if you are limited in the amount you can buy at a time and there are long lines to wait in just to get that little bit. Ah the 70's...no wonder it sucked back then.

[Hilarious Clinton 452]

Actually, I'm in favor of the high price for oil. Why? It makes alternatives like oil shale and tar sands economically viable. Most of the tar sands in the world are in Canada and Venezuela, and most of the oil shale in the world is right here in the US. So, the price of gas might stay high, but we can stop buying oil from unsavory places like Saudi Arabia, and by extension stop financing Wahabi Islam and terrorism.

good points !!!

[*Robert* 2]

Anyone paying more than $3.38 a gallon? (I don't want to hear about the prices in Europe!!! )

[Hilarious Clinton 452]

Anyone paying more than $3.38 a gallon? (I don't want to hear about the prices in Europe!!! )

It's 3.25 for super here on Long Island, NY

[*Robert* 2]

Anyone paying more than $3.38 a gallon? (I don't want to hear about the prices in Europe!!! )

It's 3.25 for super here on Long Island, NY

That's what I paid yesterday!!! It's now $3.38 here on Kauai.... There's a cost to paradise!!!

[Hilarious Clinton 452]

Anyone paying more than $3.38 a gallon? (I don't want to hear about the prices in Europe!!! )

It's 3.25 for super here on Long Island, NY

That's what I paid yesterday!!! It's now $3.38 here on Kauai.... There's a cost to paradise!!!

hey! we both live on islands They couldn't be more different though

[*Robert* 2]

Anyone paying more than $3.38 a gallon? (I don't want to hear about the prices in Europe!!! )

It's 3.25 for super here on Long Island, NY

That's what I paid yesterday!!! It's now $3.38 here on Kauai.... There's a cost to paradise!!!

hey! we both live on islands They couldn't be more different though

yep, you got that right!!!

[Hilarious Clinton 452]

Anyone paying more than $3.38 a gallon? (I don't want to hear about the prices in Europe!!! )

It's 3.25 for super here on Long Island, NY

That's what I paid yesterday!!! It's now $3.38 here on Kauai.... There's a cost to paradise!!!

hey! we both live on islands They couldn't be more different though

yep, you got that right!!!

Been out there a few time back in my Navy days. Nice!!

[Leafgal 3]

Well if you convert over from litres to US gallons and then convert the dollar from Canadian to US, here in Ontario we are paying $4.60 a gallon.

Leafgal