Oil

Gasoline and oil prices continue to march higher

AP News
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Posted: Mar 01, 2012 11:48 AM
Gasoline and oil prices continue to march higher

Pump prices continued to march toward $4 a gallon Thursday, as signs of a stronger U.S. economy helped push benchmark oil near $108 per barrel.

Retail gasoline prices continued a five-week rise to a national average of $3.74 per gallon. That's up 37 cents per gallon, or 11 percent, since late January, the last time gasoline prices fell. Prices have never been so high at this time of the year.

Benchmark crude rose 53 cents to $107.60 a barrel in New York. Brent crude, which is imported by many U.S. refiners to make gasoline, rose $1.91 to $124.57 a barrel in London.

Oil prices have risen 9 percent this year because global demand is high and supplies have been disrupted in South Sudan, Syria and elsewhere. There also is concern that tensions with Iran over its nuclear program could lead to further supply problems.

The U.S. economy has continued to grow even though high oil prices are taking spending money from consumers and make shipping and travel more expensive.

Economic data released Thursday showed applications for unemployment hit a four-year low, spending on residential construction rose and major retailers reported stronger-than-expected sales for February.

Stock prices rose on Wall Street Thursday, helped by the encouraging economic news. That bolstered the feeling that the economy could start burning more oil.

"It's almost impossible for oil to stay down with equities rising," said Rich Ilczyszyn, an analyst at ITrader.

Economists worry that high oil prices will eventually take a toll on the economy, though.

"We've weathered it OK so far, but it could become a much stronger headwind than we anticipate," said Diane Swonk, chief economist at Mesirow Financial.

Consumers have been helped by low heating and electricity bills this winter, which have eased the pain of high fill-up costs. The weather has been unusually mild across much of the country and natural gas, which is used to heat many homes and to generate electricity, has been cheap.

Natural gas futures fell more than 6 percent Thursday to $2.46 per thousand cubic feet after the government reported that supplies of natural gas declined less than anticipated last week. The nation's supplies in storage are 45 percent above the five-year average and prices are close to a 10-year low.

In other energy trading, gasoline futures rose 4 cents to $3.30 a gallon. Heating oil rose by 1 cent to $3.22 a gallon.