Oil prices gain while pump prices rise

May 19, 2008 7:48:36 AM PDT
Oil futures crept higher Monday while retail gas and diesel prices reached new records, adding to the pressure on drivers planning road trips for the coming holiday weekend. Americans are now paying an average of $3.79 for a gallon of regular gas, according to a survey by AAA and the Oil Price Information Service. Diesel now costs $4.52 a gallon.

Drivers in some parts of the country are paying considerably more, however. Gas pump prices in parts of California, where the average is down to $3.96, have been stuck above $4 a gallon for weeks now. Prices in Alaska and Connecticut are averaging just above $4 a gallon statewide.

A report released Sunday showed pump prices topped an average $4 a gallon for the first time in two metropolitan areas: Chicago and New York's Long Island. The Lundberg Survey of 7,000 stations nationwide found the cheapest city to be Tucson, Ariz., where a gallon of regular sold for $3.48 on average.

Pump prices may have further to go still, pressured by rising oil costs and a refinery shutdown.

Light, sweet crude for June delivery rose 33 cents to $126.62 a barrel on the New York Mercantile Exchange on Monday. Prices surged to a trading record near $128 a barrel Friday, but did not set a new closing high.

Crude was likely sent higher in part by a news report quoting Organization of Petroleum Exporting Countries President Chakib Khelil as saying OPEC won't increase production before its next meeting Sept. 9.

"There's a perception that demand is going to hold up pretty strongly this year," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne. "This idea that the market just couldn't handle $100 oil has just gone out the window, so there's a parallel shift at where the market will trade."

Holly Corp. said a key unit at its New Mexico refinery is down for repairs, cutting estimated gasoline production in May by as much as 756,000 gallons. The shutdown of the fluid catalytic cracking unit occurred while the unit was being brought back online from a previous shutdown on May 7.

Holly's Navajo Refinery in Artesia, N.M. is the refiner's largest facility.

With crude extending its advance, analysts warned of the negative impact for the world's greatest consumer, the U.S.

"The ongoing upward trend in crude prices is going to ensure that the U.S. economy remains under pressure," said James Hughes, an analyst at CMC Markets in London.

In other Nymex trading, heating oil futures were nearly flat at $3.7020 a gallon. Gasoline futures rose 0.61 cents to $3.2296 a gallon. Natural gas futures rose 9.4 cents to $11.188 per 1,000 cubic feet.

July Brent crude rose 8 cents to $125.07 a barrel on the ICE Futures exchange in London.


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