Oil settles higher, gas pump prices lower

AP News
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Posted: May 10, 2011 3:26 PM
Oil settles higher, gas pump prices lower

Oil rose on Tuesday after some early losses as investors tried to gauge where the market is headed. Gas pump prices fell for the fifth day after flirting with a national average of $4 per gallon last week.

Energy trader Stephen Schork said nobody's confident about their positions after oil prices tumbled last week by the largest percentage in two and a half years. The CME Group, which owns the New York Mercantile Exchange, also raised margin requirements this week, making it more expensive to speculate in energy commodities.

"Everyone's just tightening the reins here" on oil trades, Schork said.

Benchmark crude rose $1.33 to settle, or 1.3 percent, at $103.88 per barrel on the Nymex. The June contract plummeted by 15 percent last week before rebounding by more than 5 percent on Monday.

Analysts expect the Energy Department's Energy Information Administration will report Wednesday that oil supplies grew for the third straight week, though analyst Phil Flynn said prices may continue to rise, as Mississippi River flooding could knock out some refineries and tighten supplies of high-quality crude. Unplanned shutdowns at other refineries because of power outages, fires and equipment failures could crimp gasoline supplies and raise pump prices again temporarily.

Exxon Mobil Corp. spokesman Kevin Allexon said the company has been closely monitoring its refineries in Baton Rouge and outside New Orleans. Both remain in operation, he said. Valero Energy Corp. said it doesn't expect any interruption at production units in Memphis and Norco, La. Chevron Corp. and Marathon Oil Corp. wouldn't comment about the status of their refineries.

Refining problems already have cut into the nation's gasoline supply and analysts think the EIA report will show that supplies dropped by another 300,000 barrels last week. Gasoline futures rose 10.13 cents, about 3 percent, to settle at $3.3797 per gallon on the Nymex.

"This isn't the kind of thing that can last a long period of time," said Tom Kloza, chief oil analyst for the Oil Price Information Service. "I still think that six weeks from now we'll be well south of $4 a gallon." The national average for gasoline dropped nearly a penny on Tuesday to $3.951 per gallon, according to AAA, Wright Express and OPIS. A gallon of regular is 19 cents higher than a month ago and $1.043 more than last year.

MasterCard SpendingPulse said that the four-week average for U.S. gasoline consumption dropped by 1.1 percent last week. That's the seventh week in a row that demand has fallen.

In other Nymex trading for June contracts, heating oil added 3.94 cents to settle at $3.0012 per gallon and natural gas futures gained 8.7 cents to settle at $4.303 per 1,000 cubic feet.

In London, Brent crude rose $1.73 to settle at $117.63 per barrel on the ICE Futures exchange.

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Chris Kahn can be reached at http://twitter.com/ChrisKahnAP