Oil sets record near $128; pump price at high, too
By ADAM SCHRECK
AP Business Writer
NEW YORK — Oil prices surged more than $3 Friday, shattering a previous record in a spike near $128 a barrel, as prices at the pump pushed to new highs of their own.
The gains come 10 days before the Memorial Day holiday, the traditional start of the peak U.S. summer driving season, suggesting that retail gas prices still have further to rise.
Motorists are now paying a national average of $3.787 a gallon for regular gasoline, up nearly a penny from the previous day, according to AAA and the Oil Price Information Service.
Diesel prices also have risen to record levels, meaning that even Americans who don't drive will likely face even higher prices on all sorts of goods because of increased shipping costs. A gallon of diesel now sells for $4.482 a gallon.
Light, sweet crude for June delivery rose as high as $127.82 a barrel on the New York Mercantile Exchange, before easing somewhat to trade up $2.10 at $126.22. The contract settled at $124.12 Thursday, two days after reaching a previous trading record of $126.98.
"All in all, we're seeing another strong move here on little fundamental news," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill. "It's indicative of a market searching for a top."
Oil prices could rise even higher as U.S. demand picks up during the summer months, when gasoline consumption is typically the heaviest. Traders are clearly betting gasoline prices have a way to go too: Gasoline futures jumped to a record $3.2438 a gallon on the Nymex before easing to $3.2116, up 4.58 cents.
President Bush, in Saudi Arabia for his second personal appeal this year to King Abdullah, apparently failed to persuade the oil-rich nation to boost crude production — a move that would likely have pushed prices lower.
Saudi officials maintained their position that they are already meeting demand. The kingdom is the world's largest producer of oil and is a key member of the Organization of Petroleum Exporting Countries.
"What they're saying to us is ... Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy," Stephen Hadley, the president's national security adviser told reporters.
Energy traders honed in on an upward revision of an oil price forecast by Goldman Sachs from $107 to $141 a barrel for the second half of the year. The investment bank is predicting continued swings in oil prices as prices dip at times because of falling demand before again moving higher.
"Accordingly, we would view any pullback in oil, regardless of the size or duration — although a correction could be as large as 15 percent — as an opportunity to re-establish long positions in oil before the summer," Goldman Sachs advised traders.
Also pushing oil prices higher was speculation that China's demand for diesel needed to fuel its power plants would rise due to reconstruction efforts after this week's earthquakes.
In other Nymex trading, heating oil futures rose 6.58 cents to $3.6882 a gallon. Natural gas futures fell 9.3 cents to $11.306 per 1,000 cubic feet.
In London, June Brent crude surged $2.03 to $124.66 a barrel on the ICE Futures exchange.
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Associated Press Writer Jennifer Loven in Riyadh, Saudi Arabia, contributed to this report.
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