Oil Prices Break Record, Settle Above $75 a Barrel

Crude-oil prices broke through $75 a barrel to hit a new record Friday, fueled by concerns about Iran's nuclear ambitions and tight U.S. gasoline supplies.

Prices at the pump also kept rising, with the average price of a gallon of unleaded regular gasoline at $2.855, up 3 cents from a day earlier and more than 60 cents higher than a year ago, according to AAA's daily fuel gauge report.

Crude prices, which are more than 40 percent higher than a year ago, have risen 8.4 percent from Thursday's closing price - the biggest weeklong jump since the week ended June 17, 2005, when crude futures rose 9 percent.

Analysts say oil prices are likely to climb even higher in the weeks ahead as worries grow about how international pressure on Iran, OPEC's No. 2 oil producer, will affect its crude output. Rebel disruptions of oil production in Nigeria, the fifth-biggest source of U.S. oil imports, also pose a risk to supply.

"You put all these headlines together, you see the situation is getting charged up and getting out of control."

"That's why oil traders and speculators are having a field day - this is exactly the kind of environment that speculators want to operate in."

Oppenheimer & Co. oil analyst Fadel Gheit.

Light, sweet crude for June delivery rose $1.48 to settle at a record $75.17 a barrel Friday on the New York Mercantile Exchange, after peaking at an all-time trading high of $75.35. The May contract, which expired Thursday, had settled at $71.95 on Thursday.

Accounting for inflation, prices are still about 20 percent below the records reached about 25 years ago.

Traders worry that U.S. gasoline supplies may not meet summer demand after seven straight weeks of drops in domestic gasoline stocks, which are now at their lowest level since November.

"There are a lot of people that were disturbed with this week's energy numbers," said Alaron Trading Corp. analyst Phil Flynn, referring to the U.S. inventory figures. "There seems to be a lot of concern that the combination of the geopolitical issues, as well as refining issues, are enough reason not to abandon the long side of this market just yet."

At this point, there's no peak in sight.

"Everyone's asking, 'What's the high? What's the high?' In a runaway bull market, you can't say. But the market will stop climbing when it finally starts to have an impact on the economy and on demand. I don't see it stopping till we reach that point."

BNP Paribas commodity futures analyst Tom Bentz.

So far, demand hasn't been crimped significantly, encouraging traders to keep buying into the market.

"Demand continues to be relatively strong. Supply remains tight. And the global economy seems to be doing OK. As they say, no harm, no foul," Gheit said, noting that not just oil companies, but also big financial institutions have been making billions of dollars on soaring energy prices.

Brent crude on London's ICE Futures exchange rose $1.39 to settle at $74.57 a barrel Friday.

Gasoline futures rose 2.32 cents to settle at $2.2380 a gallon, while heating oil rose 2.26 cents to settle at $2.0762 a gallon. Natural gas slipped 8.3 cents to settle at $7.981 per 1,000 cubic feet.