Oil Reaches New High of $75 a Barrel [!-- END HEADLINE --] [DIV id=ynmain][!-- BEGIN STORY BODY --] [DIV id=storybody] [DIV class=storyhdr] [SPAN]By MADLEN READ, AP Business Writer[/SPAN][EM class=recenttimedate]1 hour, 13 minutes ago[/i]
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Crude-oil prices reached a new record of $75 a barrel Friday amid concern about Iran's nuclear ambitions and declining U.S. gasoline stocks.
U.S. pump prices also kept rising, with the average price of a gallon of unleaded regular gasoline at $2.855, up 3 cents from a day earlier and more than 60 cents higher than a year ago, according to AAA's daily fuel gauge report.
Analysts say oil prices are likely to climb higher in the weeks ahead as worries grow about how international pressure on Iran, OPEC's No. 2 oil producer, will affect its crude output. Rebel disruptions of oil production in Nigeria also pose a risk to world supplies.
Traders also worry that gasoline supplies may not meet summer demand after seven straight weeks of drops in domestic gasoline stocks, which are now at their lowest level since November.
"There are a lot of people that were disturbed with this week's energy numbers," said Alaron Trading Corp. analyst Phil Flynn, referring to the U.S. inventory figures. "There seems to be a lot of concern that the combination of the geopolitical issues, as well as refining issues, are enough reason not to abandon the long side of this market just yet."
U.S. refineries are operating below normal levels, as they continue to recover from last fall's hurricanes that battered the Gulf Coast, and as they perform seasonal maintenance. Furthermore, the transition from the gasoline additive MTBE, found to be a groundwater pollutant, to ethanol is creating additional fears about an already tight gasoline market.
Crude prices are more than 40 percent higher than a year ago, and have risen about 5 percent just this week — a week that has seen not only crude and gasoline prices reach record heights, but also huge surges in other commodities, especially metals.
"I'm inclined to think it's not reached a peak yet," said Tobin Gorey, commodity strategist at the Commonwealth Bank of Australia in Sydney. "We're still faced with a tight supply-demand equation against the backdrop of strong economic growth, and there's still more money to come into the market," he said. He added that the Iranian threat was responsible for adding at least $15 per barrel to the oil price.
Light, sweet crude for June delivery rose to $75 a barrel in early afternoon trading Friday on the New York Mercantile Exchange, setting a new intraday record for a front-month contract. The May contract, which expired Thursday, settled at $71.95 on Thursday.
Most analysts agree that overall sentiment is still bullish in the energy markets, but Flynn warned that the market will see a pullback at some point, and the higher prices go, the bigger that correction will be.
Brent crude for June rose to $73.15 a barrel on London's ICE Futures exchange.
Gasoline futures rose 0.52 cents to $2.22 a gallon, while heating oil rose 2.64 cents to $2.08 a gallon. Natural gas slipped 11.4 cents to $7.96 per 1,000 cubic feet.
On Thursday, Hugo Chavez, president of Venezuela, one of the world's top oil producers, said oil prices would reach $100 a barrel should concern over Iran's nuclear weapons capability lead the United States to invade the Middle Eastern nation.
The United States and Britain say if Iran does not comply with the Security Council's April 28 deadline to stop uranium enrichment, they will seek a resolution that would make the demand compulsory. Iran has consistently resisted calls to abandon its enrichment program.
Also, in Nigeria, the fifth-biggest source of U.S. oil imports, militants exploded a car bomb inside a military base late Wednesday, in their first major attack since February. This year, the group has cut more than 20 percent of Nigeria's daily oil exports of 2.5 million barrels.
A spokesman for Shell Petroleum Development Co. in Nigeria on Friday said security concerns in the region were preventing the restart of up to a fifth of its oil output and the company was not in a hurry to start up production.
Royal Dutch Shell PLC's announcement Thursday that its Mars platform will resume normal production by late June offered some relief to the markets. It is the largest oil platform in the Gulf of Mexico damaged by Hurricane Katrina, and accounts for about 5 percent of total Gulf of Mexico oil and natural gas production.
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