Oil at new high in thin trading
Oil futures resumed their march toward $100 a barrel Friday, rising to a new record close in light holiday trading on concerns about tight heating oil supplies while drawing support from a buoyant stock market.
At the pump, meanwhile, gas prices retreated further from their most recent peak, easing 0.1 of a cent overnight to a national average of $3.086 a gallon, according to AAA. In California, the average slipped 0.1 of a cent to $3.423 a gallon.
Gasoline prices rose sharply from mid-October until last week. But the national average has eased 2.6 cents a gallon since, countering predictions that gas prices were destined to add another 10 to 15 cents to catch up with skyrocketing crude prices.
Analysts now say gas prices are likely to hold steady or even slide a little unless oil rises beyond $100 a barrel.
Oil prices drew support Friday from heating oil futures, which set new records on concerns about tight supplies heading into the winter heating season. Inventories of distillates, which include heating oil, fell sharply last week, the Energy Department reported on Wednesday.
Light, sweet crude for January delivery rose 89 cents to settle at $98.18 a barrel on the New York Mercantile Exchange, besting the previous settlement record by 15 cents, while December heating oil futures rose 1.68 cents to settle at $2.704 a gallon after earlier setting an intraday trading record of $2.718 a gallon.
Crude prices reached a trading record of $99.29 a barrel on Wednesday and are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
Heating oil prices are rising because of falling supplies at home and overseas, analysts said. “The heating oil market, it’s more of a global story,” said Andrew Lebow, senior vice president of MF Global Inc. in New York. “Because of refinery problems in Europe, [supplies] are kind of tight.”
Energy futures also drew support from Friday’s rise in the stock market. Energy investors often view stocks as a proxy for the economy’s strength, betting that a stronger economy will use more oil and gasoline.
In other Nymex trading Friday, December gasoline rose 2.99 cents to settle at $2.467 a gallon while December natural gas rose 15 cents to settle at $7.70 per 1,000 cubic feet.
Analysts warned that the thin transaction volumes on a Thanksgiving holiday-shortened trading day exaggerated the effect of each trade.
“Given the thin trade, any minor bullish headlines will be capable of spiking this market to the upside,” Jim Ritterbusch, president of Ritterbusch & Associates of Galena, Ill., wrote in a research note.
