Washington – Oil prices jumped to a record close of $75.19 a barrel Wednesday, propelled by a rally in gasoline that analysts said could send average U.S. pump prices past $3 a gallon by the weekend.
Recent snags in oil shipping and refining along the Gulf Coast have raised traders’ concerns about motor-fuel supplies at a time when demand continues to rise despite soaring prices. The start of a new fiscal quarter also has brought more speculative money into the market, brokers said.
“Everybody thought we’d hit a price that would create permanent demand destruction, but demand for gasoline is rising,” said Alaron Trading Corp. analyst Phil Flynn. “Once again, the American public has shown its ability to get over paying high prices for gasoline.”
A protracted diplomatic standoff between the West and Iran, OPEC’s No. 2 oil supplier, has kept a high floor beneath prices, and analysts said geopolitical tensions were heightened further Wednesday by North Korea’s test-firing of missiles.
Meanwhile, ethanol prices extended a three-month rally to record levels as increased demand for the gasoline additive outpaced production. U.S. ethanol averaged a record $3.9757 a gallon Wednesday, up 4.1 percent from $3.8194 since June 30, according to data compiled by Bloomberg.
Light, sweet crude for August delivery briefly surged to $75.40 a barrel on the New York Mercantile Exchange before easing back to settle at $75.19, an increase of $1.26. Gasoline futures jumped by more than 5.7 cents to settle at $2.2758 a gallon, and heating oil closed at $2.0626 a gallon, up 3.4 cents.
Bloomberg News contributed to this report.
