Gasoline futures today touched $1 a gallon on the New York Mercantile Exchange--for the first time since trading in the product began in 1984--after OPEC spurned a call for an emergency meeting.
Tight supplies and rising fears of war in the Mideast have driven the wholesale price for gasoline steadily higher in recent weeks.
“The market is being driven by fear of war, and every day that gets worse. Gasoline is leading on lack of imports and strong demand,” said Tom Bentz, a United Energy Inc. analyst.
Nymex September gasoline touched a record high of $1.0125 today, with an initial gain of 5.13 cents, but then pulled back to stand at 99.25 cents, up 3.28 cents a gallon.
September crude briefly hit a four-year high of $29.25 a gallon, with an early gain of 62 cents. By 1 p.m. its gain was cut to 2 cents at $28.65 a barrel.
The Organization of Petroleum Exporting Countries said Saudi Arabia had failed to garner sufficient support to call a meeting of the cartel to stabilize the market.
A brief statement by OPEC said its president, Algeria’s Sadek Boussena, will meet with some other oil ministers before the end of the month to discuss the situation. It did not elaborate.
Saudi Arabia’s oil minister, Hisham Nazir, said Saturday that his country will boost oil production by as much as 2 million barrels a day with or without the support of OPEC.
He had urged the cartel to hold a special session to try to take measures to bring down oil prices, which have soared because of the Middle East crisis.
The markets failed to decline on the news of the Saudi output increase even though such a move will add to already large world oil inventories.
“There’s a lot of tension,” said a vice president with Merrill Lynch Energy Futures. “The products, unleaded gasoline and heating oil, are on the way up. They are moving up much faster than the price of crude.”
A 4-cent increase in futures prices of gasoline will likely mean an increase of about the same amount soon at the pump. “As a rule, it’s penny for penny, I would say within a week or so,” said Stephen Smith, a Bear Stearns & Co. analyst.
Prices were also pushed up by a speech by President Bush in which he said that the United States will not be intimidated in the gulf crisis and that foreigners in Iraq and Kuwait who are unable to leave are in fact hostages. Traders said his hard-hitting statements pointed to a prolonged crisis.
The Iraqi invasion of Kuwait on Aug. 2 and the embargo that followed took more than 4 million barrels of oil off world markets daily. But OPEC hard-liners say that despite the production cutback, they are unwilling to increase output, citing world oil stocks at high levels.
Iranian Oil Minister Gholamreza Aghazadeh, at a Tehran news conference held today before the OPEC announcement, said there was no need for an OPEC meeting when the international market is awash with surplus crude.