Crude Tops $51, Signaling More Pain at Pump

The price of oil shot above $51 a barrel for the first time since late October on Tuesday, probably condemning motorists to another round of gasoline price increases.

The benchmark U.S. grade of crude oil for March delivery soared $2.80, or 5.8%, to $51.15 on the New York Mercantile Exchange. It was the commodity’s biggest one-day percentage gain since June.

The jump rekindled fears of a slowdown in U.S. economic growth and helped depress the stock market.

Pump prices have been climbing in response to an earlier upswing in oil, which accounts for about half the retail price of each gallon of gasoline.

Seasonal maintenance at refineries, which crimps supplies as oil companies switch from winter to summer blends of fuel, also has helped lift prices at the pump.

The average price for self-serve regular in California rose this week for the fifth straight week, gaining an additional 5.9 cents to $2.15 a gallon, according to the Energy Department.

Now, with crude prices spurting higher again, “gasoline prices are on a trajectory that is going to take them above last year’s highs,” especially once the busy summer driving season begins, predicted Tom Kloza, chief oil analyst at the Oil Price Information Service, a company that tracks fuel prices.

Already, prices at some service stations in California are well above the $2.15 statewide average.

“I was shocked” to see regular selling for $2.519 at a Chevron in downtown Los Angeles, said Keith Mallett of La Mesa. But he added: “You’ve got to pay, so what can you do?”

Oil prices are trading at lofty levels because global supplies of crude are stretched thin, while the world’s thirst for oil -- especially in the U.S. and China -- keeps climbing steadily.

The energy markets have been repeatedly roiled over the past year by various events, such as terrorism in the Middle East and political tensions in Russia, that posed a threat to those tight supplies.

Given those conditions, the energy markets recently had anticipated that oil might again surpass $50 a barrel. Yet the sudden surge Tuesday caught some analysts by surprise because it wasn’t triggered by one major development.

“Fundamentally there was nothing we saw that could justify the move,” said Steven Bellino, a senior vice president at Fimat USA Inc., a commodities brokerage in New York.

Traders returning from the three-day holiday weekend seized on several factors to bid prices higher not only for crude oil but also for gasoline and heating oil.

They cited especially cold weather in the Northeast and in Europe, murmurs that the Organization of the Petroleum Exporting Countries might further trim its production, and weakness of the U.S. dollar against other major currencies.

Crude-oil trading worldwide is denominated in dollars. So the dollar’s slide, among other things, could raise demand for oil in countries where their currencies are rising in value against the greenback, giving oil prices a further boost.

One reason behind the latest rally is OPEC’s recent decision to reduce production by 1 million barrels a day, or 3.6%, to 27 million starting Jan. 1, analysts said. The cartel pumps more than one-third of the world’s oil output.

There has been market speculation that OPEC might cut back even more but that notion was rejected Tuesday by OPEC President Sheik Ahmed Fahd al Ahmed al Sabah. “We have to respect this price and to cooperate with others for the stability of the market,” he told reporters.

OPEC’s next scheduled meeting is March 16 in Iran.

Oil last closed above $50 a barrel Nov. 3, when it settled at $50.88 on the New York Mercantile Exchange, dubbed the Nymex. Oil last closed above $51 a barrel on Oct. 29, when it settled at $51.76 on the Nymex.

The exchange’s record closing high for crude is $55.17 a barrel, reached twice in October.

Adjusted for inflation, however, oil traded at much higher levels in the late 1970s and early 1980s, especially in the run-up to the Iranian revolution in 1979 and the Iran-Iraq war in 1980.

In dollar terms, Tuesday’s gain was the biggest one-day jump since Oct. 12, 2000, when oil rose $2.81 a barrel to $36.06. In percentage terms, the jump Tuesday was the biggest since oil rose 6.1%, or $2.45 a barrel, to $42.33, last June 1.

Tuesday marked the last day of trading for crude oil’s March contract on the Nymex. The April futures contract, which will become the primary current contract today, rose $2.41 to $51.42 a barrel Tuesday.

Heating oil for March delivery on the Nymex soared 9.09 cents, or 6.7%, to $1.4402 a gallon. And gasoline futures rose 4.55 cents, or 3.6%, to $1.31 a gallon.

The average pump price for regular gasoline nationwide inched up 0.7 cent to $1.905 a gallon in the latest week, the Energy Department’s Energy Information Administration said in its weekly survey released Tuesday. The report was delayed a day because of the Presidents Day holiday.

In California, the average price stood 12.1 cents above its year-earlier level, but well below its record high $2.402 a gallon reached Oct. 18.

At the downtown Los Angeles Chevron station, motorists paying more than $2.50 a gallon said they were growing accustomed to the higher prices.

“We get used to it and they just keep on raising it,” said Pete Masters of Los Angeles. “The days of a 99-cent gallon of gas are long gone.”

Times staff writer Andrew Wang contributed to this report.