Crude Oil, Gasoline Prices Up Sharply : Energy: The U.S. futures market comes into line with foreign trading centers. Fuel prices are surging in reaction to the failure of a U.N. mediation mission to Iraq.
Crude oil and gasoline prices surged on energy markets Tuesday as traders reacted with disappointment to the failure of a U.N. effort to diffuse the Persian Gulf conflict.
U.S. markets, which were closed Monday for Labor Day, played catch-up with trading centers in Europe and Asia that saw sharply higher prices after U.N. Secretary General Javier Perez de Cuellar returned from Iraq without an agreement to win the release of Western hostages or the withdrawal of Iraqi troops from occupied Kuwait.
On the New York Mercantile Exchange, the price of a barrel of West Texas Intermediate--the U.S. benchmark crude oil--for delivery in October rose $1.80 to close at $29.12. During periods of international calm, traders said, oil prices on the exchange move up or down by about 25 cents a day.
Prices shot up “pretty much on the news that Perez de Cuellar didn’t have any more luck than anyone else in terms of working out a diplomatic solution,” said Tom Bentz, director of trading at United Energy Inc. in New York.
Traders expect crude oil prices to remain in the $30-a-barrel range if no major development alters the current standoff in the Mideast. “It’s just such a touchy market,” Bentz said. “You could come in tomorrow and find that things have cooled a little bit.”
Traders also bid up prices of gasoline and fuel oil Tuesday. October gasoline rose 8.34 cents to 94.52 cents a gallon, and October heating oil gained 5.83 cents to 82.39 cents.
The continued increase in gasoline prices surprised many in the market. The demand and price for gasoline usually begins to dip in September and October with the end of the summer travel season.
But some traders cited industry statistics that showed a relatively tight supply of gasoline inventories last month. A recent survey by the American Petroleum Institute showed that U.S. gasoline inventories averaged about 210.9 million barrels during the week ended Aug. 24--down about 8.5 million barrels from the beginning of August.
“You are looking at very low inventory levels,” Bentz said. “Gasoline could still go a lot higher.”
A shortage of sellers has also forced buyers to bid up the price of gasoline on the futures markets, traders said. Daniel Uslander of Hilltop Trading, a New York-based futures trading firm, said many sellers stayed out of the market “because of the uncertainty” and are “waiting for prices to move in some perceived pattern.”
A prolonged pattern of gasoline price hikes could push consumers toward more fuel-efficient autos, according to a study released Tuesday by Integrated Automotive Resources of Wayne, Pa.
About 12.6% of those surveyed said that if the price of fuel reaches $1.40 a gallon, they would trade in their car for one that gets better mileage.
