U.S. gas prices approach record mark - News, Weather, Sports, Toledo, OH

U.S. gas prices approach record mark

NEW YORK (CBS/AP) -- Gasoline prices were poised Monday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon.

The national average price of a gallon of gas rose 0.7 cent overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as surging demand and a string of refinery outages raised concerns about supplies.

That record will likely be left in the dust soon as gas prices accelerate toward levels that could approach $4 a gallon, though most analysts believe prices will peak below that psychologically significant mark.

Deirdre Bolton of Bloomberg TV told CBS' The Early Show that gas prices will probably rise another 20 or 30 cents per gallon unless oil decrease, something, Bolton said, most analysts think is
unlikely to happen.

In its last forecast, released last month, the Energy Department said prices will likely peak around $3.40 a gallon this spring; a new forecast is due Tuesday.

Retail gas prices are following crude oil, which jumped as much as 24 percent in a month on its way to setting new inflation-adjusted records four times last week. On Monday, crude prices fluctuated as the dollar stabilized and as tensions between Venezuela and its neighbors Colombia and Ecuador cooled.

Still, there was little in oil's price uncertainty to convince analysts that the huge runup in oil prices has run its course.

"We've got a Fed(eral Reserve) meeting on the 18th that could see a sizeable rate cut," said Brad Samples, an analyst with Summit Energy Services Inc., in Louisville, Ky. "So, it's not over."

By gobbling up everything in sight, (investors) are pushing food and fuel prices to ruinously high levels.

Peter Beutel
president, Cameron HanoverLight, sweet crude for April delivery rose 12 cents to $105.27 on the New York Mercantile Exchange, but alternated between gains and losses. The contract set a new trading record of $106.54 a barrel on Friday, exactly one month after dipping as low as $86.24.

Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.

While the dollar rose slightly against the euro on Monday, many investors believe the dollar is likely to keep falling as the Fed continues to cut rates. Many analysts believe the rise in crude prices is not supported by the market's underlying fundamentals, noting that supplies are generally rising while demand is falling.

"By gobbling up everything in sight, (investors) are pushing food and fuel prices to ruinously high levels," said Peter Beutel, president of the energy risk management firm Cameron Hanover, in a research note.

In South America, meanwhile, Venezuela said Sunday it was restoring full diplomatic ties with Colombia after they were broken off following a cross-border Colombian attack on a leftist rebel camp in Ecuador.

Last week, rebels shut down a Colombian oil pipeline in retaliation for the Colombian raid into Ecuador. Venezuela threatened to slash trade and nationalize Colombian-owned businesses, and Venezuela and Ecuador briefly sent troops to their borders with Colombia.

The potential for conflict involving Venezuela, an OPEC member and major U.S. oil supplier, helped push oil higher last week.

"The Venezuelan production was at risk there," Samples said.

Other energy futures fell Monday. April heating oil futures dropped 1.37 cents to $2.9333 a gallon while April gasoline futures fell 2.78 cents to $2.6665 a gallon.

April natural gas futures slid 10.4 cents to $9.665 per 1,000 cubic feet.

In London, Brent crude futures fell 69 cents to $101.69 a barrel on the ICE Futures exchange.

Posted by KO

The Associated Press and CBS News contributed to this report.

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