News & Observer | newsobserver.com | Gas prices head upward

Published: Jul 07, 2007 12:30 AM
Modified: Jul 07, 2007 02:44 AM

Gas prices head upward

Futures prices hit 10-month high

 

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NEW YORK - Retail gas prices rose overnight Friday for the first time in more than a month as the closing of a Kansas refinery sent prices in the center of the country sharply higher. Oil futures, meanwhile, surged $1 a barrel to another 10-month high.

The average national price of a gallon of gas inched up 0.3 cent to $2.95, according to AAA and the Oil Price Information Service. The average pump price in the Triangle was $2.87.

Retail prices, which typically lag futures, had fallen steadily since their late May peak of $3.227 a gallon.

Analysts have argued that the slide was due to end and that prices were likely to start following futures prices higher. Futures have rallied in recent weeks on concerns about domestic refining capacity.

It's unclear how much prices will rise. Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, said the overnight increase is almost all attributable to price jumps in Plains and some Rockies states. Supplies there have been cut by flooding and the closing of a refinery in Coffeyville, Kan., that can produce 2.1 million gallons of gasoline per day.

However, if retail gas prices are destined to follow futures higher, then they're likely to keep rising. Oil and gasoline futures rose Friday on continuing concerns about violence and abductions in Nigeria and a sense that domestic refiners are struggling to produce enough gas.

Light, sweet crude for August delivery gained $1 to settle at $72.81 a barrel on the New York Mercantile Exchange. That was the front-month contract's highest settlement since Aug. 15.

August gasoline rose 2.53 cents to settle at $2.31 on the Nymex.

Oil prices reached nearly one-year highs this week, rising 3 percent from last Friday's settlement price of $70.68. That was the front-month contract's first close above $70 since August.

Many analysts think technical trading could send oil prices even higher in the short term.

"I wouldn't be surprised to see a run at ... $78.40," the highest-ever intraday price for a front-month crude contract, set last July 14, said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill.

But there is a sense among others that prices can't stay this high for long.

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