Oil futures approached $37 a barrel Monday, the highest level in nearly a year, as traders fretted about low supplies and the high price of gasoline, which averaged $1.72 per gallon at the pump last week.
Crude for April delivery settled at $36.86 per barrel on the New York Mercantile Exchange, up 70 cents. It was the highest settlement price for crude futures since March 12, 2003, when oil traded at $37.83.
Unleaded gasoline futures, meanwhile, gained 2.12 cents on Monday to settle at $1.147 per gallon on Nymex.
“It’s kind of a runaway train,” said Tom Kloza, director at Oil Price Information Service, a Lakewood, N.J., publisher of industry data.
Kloza said nationwide, gasoline prices will likely rise for another couple of weeks because of expensive wholesale costs that retailers will pass through to customers. But after that he expects pump prices to moderate, at least until Memorial Day — the official start of the summer driving season.
“These are numbers that can’t be sustained for long,” he added.
The Energy Department reported Monday that the average retail price of gasoline rose 2.9 cents to $1.717 per gallon for the week ended March 1. A year ago, the pump price averaged $1.69 per gallon.
Prices were highest on the West Coast, averaging $2.02 per gallon, followed by the East Coast, where the average was $1.68 per gallon.
Right now, oil and gasoline prices are propelling one another higher. First the market was focused on expensive crude oil, the raw material for gasoline, heating oil and jet fuel. Now, traders say gasoline is leading the way.
“We have low gasoline inventories right now and that leaves us susceptible to spikes,” said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York.
This is also the time of year for turnaround, when refiners temporarily shut down to conduct maintenance before ramping up production of special blends of cleaner-burning gasoline required for the busy summer driving season. As a result, supplies tend to contract.
“The general theory is that once refiners come out of turnaround that there will be plenty of gasoline out there,” Bentz said. He said that has been complicated this year by the fact that New York and Connecticut are introducing a new additive to their gasoline supply and refiners must meet new low-sulfur guidelines.
For the week ended Feb. 20, the most recent date for which data is available, U.S. gasoline inventories stood at 203.4 million barrels, 2.5 million barrels below year-ago levels and 9.5 million barrels below the five-year average, according to the Energy Department.
Gasoline demand is currently about 8.75 million barrels per day, and Kloza estimated that figure would rise by 2 percent during the summer.
Oil inventories stood at 273.8 million barrels for the week ended Feb. 20, or 2.6 million barrels above last year’s level but 26.4 million barrels less than the five-year average.
Heating oil for April delivery finished the day Monday at 94.79 cents per gallon, up less than a penny, while natural gas futures settled at $5.55 per 1,000 cubic feet, up 13.4 cents.
In London, Brent crude traded at $33.34 per barrel, up $1.11.
