Crude briefly tops $55 a barrel
Volatility of oil markets pushes Dow down 107
There's no telling how high oil prices will climb -- they briefly surpassed $55 a barrel yesterday -- but analysts are confident retail gasoline prices, now $2 a gallon nationwide, have yet to peak for the year.
Two factors point to more pain at the pump, they said. The wholesale price of motor fuel is up more than 20 percent since the start of the month, and in 19 out of the last 20 years, gasoline prices have risen between early March and the middle of May.
''We're not at a top yet," said Tom Kloza, director of Oil Price Information Service in Lakewood, N.J. Kloza said he expects the nationwide average to surpass $2.10 a gallon before long -- a forecast that is in line with recent predictions by the Energy Department.
Crude futures rose yesterday as traders shrugged off evidence of rising supplies in the United States and focused instead on strong demand, cold weather, and the weak dollar.
Light, sweet crude climbed as high as $55.65 per barrel on the New York Mercantile Exchange -- just two cents short of the intraday record -- before slipping to settle at $54.77, a gain of 18 cents.
The highest Nymex settlement price on record was $55.17 per barrel, set twice in late October, although prices would have to surpass $90 per barrel to meet the inflation-adjusted peak set in 1980.
Wall Street traders cited the recent volatility of oil markets for a slide in stocks yesterday. The Dow closed down 107.00, or 0.98 percent, at 10,805.62, diminishing hopes that the index would soon break the 11,000 mark for the first time in nearly four years.
While analysts said the recent run-up in oil prices has also been speculative in nature, they conceded that prices were likely to remain high so long as the economy continues to grow.
''There is no shortage anywhere," said James Cordier, president of Liberty Trading Group in St. Petersburg, Fla.
Even the top executive of ExxonMobil Corp., the world's largest oil company, said yesterday that energy markets were red-hot beyond what supply and demand alone would dictate.
OPEC ministers have signaled they will not raise output at their meeting next week. 