Oil ends at record above $129

Talk of $150-a-barrel crude and concern about diesel use in China spark another big advance.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

America's Money: Gas crunch hits home America's Money: Gas crunch hits home America's Money: Gas crunch hits home
The record-high price of gasoline is putting a strain on motorists - and spurring some to shift their habits. Here are their stories.

NEW YORK (CNNMoney.com) -- Oil prices surged to a new record above $129 a barrel Tuesday amid continuing concern about global supply.

U.S. light crude for June delivery jumped $2.02 a barrel to settle at $129.07 a barrel on the New York Mercantile Exchange, topping the previous closing record of $127.05 set Monday.

Oil also set a new trading high of $129.60 earlier in the day, surpassing the previous trading high of $127.82 hit Friday.

One broker said the surge was partly caused by oilman T. Boone Pickens, who predicted crude would hit $150 this year on a news show Tuesday morning.

"I was watching it and I was like, 'whoa,'" said Andrew Lebow, a broker at MF Global in New York. "It seems that had an impact on the market."

Nauman Barakat an energy trader at Macquarie Futures, the trading arm of Macquarie investment bank, said the surge was led by distillates, which jumped 10 cents a gallon in early morning trade.

Barakat said he'd seen no news that would have caused the jump, but noted how strong demand for distillates, which are used to make diesel fuel and heating oil, has been pushing up the price for those fuels in recent weeks.

On Friday, traders attributed the surge in price to anticipated demand for diesel fuel to run heavy equipment and emergency generators in China, where more than 40,000 people died from an earthquake last week.

Diesel fuel has been in tight supply for the past several months following a cold winter in the Northern Hemisphere, and as the popularity of diesel cars grows in Europe and the developing world.

With diesel prices outpacing gasoline, refiners in the United States have been ramping up production of diesel and sending it abroad. That has displaced some domestic gasoline production, helping push gas prices higher.

Also seen as a reason for the latest advance: Algerian Energy Minister Chakib Khelil, the current president of the Organization of Petroleum Exporting Countries, was quoted by a government newspaper as saying OPEC would not increase its output during the U.S. summer driving season, according to the Associated Press.

Close to the record

OPEC's next meeting is scheduled for Sept. 9.

Concern about supply has recently become the primary driver of the market, replacing earlier worries about a weakening dollar, and not even Saudi Arabia's promise last week of an additional 300,000 barrels of crude a day could alleviate those new concerns.

Despite that promise from the world's leading oil producer and the U.S. move to temporarily stop filling government stockpiles, prices have shown no indication of stopping their record run.

Through Monday's close, the front-month contract has hit nine trading or closing records in 11 sessions.

In other price-supportive news ahead of the U.S. driving season, independent refiner Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by as much as 756,000 gallons per day. The shutdown occurred while the fluid catalytic cracking unit was being brought back online from a previous shutdown May 7.

The refinery in Artesia, N.M., is Holly's largest.

As oil prices reach new heights, so have gasoline and diesel costs.

"Average gasoline prices in the U.S. rose for an eighth straight week and for the fifteenth time this year, up 1.8% or 6.9 cents to a record $3.791 a gallon," the AP quoted Stephen Schork saying in his Schork Report. "Gasoline at the pump is averaging 28 1/2% above last year's pace.

"Meanwhile, average diesel prices are up by 43% or $1.134 a gallon. As of Monday prices rose 3.7% to a $4.497 per gallon average!"

Drivers in some parts of the United States are paying considerably more, however. Gas pump prices in parts of California have been stuck above $4 a gallon for weeks now.

- From staff and wire reports To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Royal wedding: How much will it cost? Meghan Markle's wedding to Prince Harry could cost millions once security is included in the bill. See how the costs break down. More
Robot co-workers? 7 cool technologies changing the way we work Experts believe humans and machines will work much more closely together. More