Gas prices rose further into record territory Monday, pulled higher by resurgent oil futures and a growing belief that gasoline supplies...
NEW YORK — Gas prices rose further into record territory Monday, pulled higher by resurgent oil futures and a growing belief that gasoline supplies are falling as the summer driving season approaches.
Oil futures, meanwhile, jumped nearly $3 to more than $109 a barrel as traders bet the Federal Reserve will continue cutting interest rates.
At the pump, the national average price of a gallon of gas jumped 3.6 cents over the weekend to a record $3.339, according to AAA and the Oil Price Information Service. That’s 58 cents higher than a year ago.
Gas prices are following crude futures higher, but they’re also rising on concerns about supplies and demand. Analysts say refiners have cut back on gas production due to low profit margins; the rising price of crude means it costs them more to refine gas.
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And last week, the Energy Information Administration said gasoline inventories fell more than expected during the week ended March 28. Gasoline demand rose for the first time since January, raising the prospect that supplies will fall further as Americans drive more during the spring and summer.
In oil trading Monday, May futures rose $2.86 to settle at $109.09 a barrel on the Nymex, as traders shrugged off a slightly weaker dollar and bet that future Fed rate cuts will weaken the greenback. A weak dollar attracts investors to hard commodities such as oil, which are seen as a hedge against inflation. Also, a falling dollar makes oil cheaper to investors overseas.
The prospect that the Organization of Petroleum Exporting Countries will hold production steady this year also pushed oil prices higher Monday. “OPEC’s Secretary-General, Abdullah al-Badri, made it clear over the weekend that the cartel continues to believe that the world is sufficiently supplied with oil and … has no plans to increase output any time soon,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.