Ready for $3 gas again?

[southsider2k5]

To be honest, I am going to bet that we see $3.50 to $4 a gallon this summer, just because supply is short, fear is high, and nothing has actually happened yet. If we get a big supply disruption from a natural or terror disaster, or something of that ilk, it is going to get ugly. The futures are at their highest levels since Katrina.

 

Gasoline futures rose past $2 a gallon to trade at their highest level since early September Thursday and crude prices climbed to a two-month high above $68 a barrel as traders fretted about a five-week decline in U.S. gasoline supplies.

 

"The failure to rebuild gasoline stocks in the month of April could result in drastic regional supply shortages in the coming months, and that concern is certainly being expressed in rising prices," said John Kilduff, an analyst at Fimat USA.

 

Gasoline for May delivery climbed as high as $2.004 a gallon on the New York Mercantile Exchange, a level it hasn't seen since early September. The contract was last up 4.54 cents, or 2.3%, at $1.9925 a gallon.

 

May heating oil followed its peer higher, climbing 1.62 cents to $1.885 a gallon.

 

And May crude was up 53 cents at $67.60 a barrel, after reaching $68.20, its highest level since Feb. 1 when the contract tapped $70.10. The contract's record stands at $70.29, from Sept. 1, but the all-time high for a front-month futures contract stands at $70.85 from Aug. 30.

 

Metals joined in on the broad rally in commodity futures, with gold touching $600 an ounce for the first time since Jan. 1981, silver at a more than 22-year high above $12 and copper futures also reaching a record.

 

Traders warned that gold prices may retreat once they reach $625 an ounce, but in the next few years they expect prices to trade at $1,000 or more. See full story.

 

Fuel for gasoline

Gasoline futures climbed 2.7% Wednesday after the Energy Department said supplies of the fuel fell by 4.4 million barrels in the week ended March 31, to tally a five-week total decline of 14.1 million.

 

Analysts said gasoline inventories have been impacted by efforts from refiners to clear their stocks of gasoline containing the additive methyl tertiary-butyl ether, or MTBE, which is being phased out by a May 5 deadline.

 

Also, government data released Wednesday showed the seventh rise in crude inventories in eight weeks. See full story.

 

"For the moment, militant attacks against oil installations in Nigeria and tensions between the West and Iran over Tehran's restarted nuclear program have assumed a temporary quiescence, but they have not gone away," said Kilduff, in a note to clients.

 

"Iran keeps making a show of testing what seems, for them, an array of exotic weaponry," he said.

 

In Nigeria, "hope for restoring the lost production dimmed after some of the militants involved in recent attacks said they would not participate in talks with the government," he said.

 

Natural gas posts small supply fall

Elsewhere in energy trading Thursday, natural-gas futures headed lower following a minor decline in last week's U.S. inventories.

 

May natural gas was down 11.4 cents at $6.955 per million British thermal units, retreating from an earlier high of $7.25.

 

U.S. natural-gas stocks fell by 10 billion cubic feet for the week ended March 31, the Energy Department reported Thursday.

 

The figure was in line with Global Insight's expectations, but IFR Markets expected an increase of 10 billion to 20 billion cubic feet -- which would've been the first rise of the season.

 

"We are entering spring with near-record levels of inventory," said Rakesh Shankar, an economist at Economy.com. "A recent cold spell notwithstanding, few people now care about surprises in this release, seeing as how total inventories are nearly 70% above average."

 

Total stocks now stand at 1.695 trillion cubic feet, up 447 billion cubic feet from the year-ago level, and 654 billion cubic feet above the five-year average, the government data said.

 

Still, Economy.com said there is some upside potential for natural-gas prices in the second half of the year.

 

"In the next few months, the market will be reminded of the production shortages we persistently suffer on the Gulf Coast, which will help bring prices back up by the third quarter from current lows," said Shankar. "Fears of another active hurricane season this year will also add a premium to natural gas prices in the third quarter."

 

In energy-linked equities trading Thursday, benchmarks tracking the oil and gas sectors edged lower, with the Amex Oil Index (.XOI: News, Quote) losing the most ground.

 

In other futures trading, gold futures touched $600 an ounce for the first time since Jan. 1981, silver climbed to a more than 22-year high above $12 and copper futures reached a record. See related story.

 

Taking a broad measure of the commodity-futures markets, the Reuters/Jefferies CRB Index was up 0.8% at 338.68 points on the New York Board of Trade.

 

Myra P. Saefong is a reporter for MarketWatch in San Francisco.Ciara Linnane is markets editor for MarketWatch in New York.

 

Copyright © 2006 Thomson Financial. All rights reserved.

[RockRaines]

its already over 3 bucks here.

[The Critic]

It's already $2.95 for mid-grade by me.

[BigSqwert]

Glad I sold my car.

[southsider2k5]

Its $2.54 for me... just for perspectives sake.

[Iwritecode]

I just paid $2.56 this morning but it hasn't been under $2.50 for the past 3 weeks.

[greasywheels121]

Can't wait!

[IlliniKrush]

$2.59 in champaign

 

$3+ this summer, ugh....

[Balance]

...and I have to put 93 octane in my car. Good thing it gets almost 30 miles per gallon.

[Steff]

Just paid $3.02 for premium..

[Chisoxrd5]

Just paid $2.71 for regular. I need to stop working at Dairy Queen

 

And yes gas prices will be over $3.00 this summer. *sigh*

[Rex Kickass]

So Crude Oil inventories are up. But the price for crude is higher?

 

At what point is our government going to come in and force some of these oil companies who control the production and distribution of a necessary product for our security and economy to actually build the refineries we need to increase capacity?

[southsider2k5]

Unless the oil companies are buying from themselves on the spec. markets, they aren't the ones driving up prices. They can control the supply to some extent, but if supplies are up across the board, it isn't them doing the deed.

[Rex Kickass]

But gas supplies are down. Driving up gas futures, right? I'm not calling for price controls or anything, but I think that the government ought to regulate a minimum for capacity maintenance that oil/gas companies have to spend per year.

[southsider2k5]

But gas supplies are down. Driving up gas futures, right? I'm not calling for price controls or anything, but I think that the government ought to regulate a minimum for capacity maintenance that oil/gas companies have to spend per year.

 

Actually a throw away paragraph saids it all in the middle of the story.

 

Analysts said gasoline inventories have been impacted by efforts from refiners to clear their stocks of gasoline containing the additive methyl tertiary-butyl ether, or MTBE, which is being phased out by a May 5 deadline

 

More government regulations are most likely to blame for the decrease in supply.

[Balta1701]

More government regulations are most likely to blame for the decrease in supply.

Actually, I would blame the human body for the decrease in supply, since the human body needs water, and that stuff has a real nasty habit of ruining drinking water. Also, the human body may have other problems due to the stuff, like cancer, but that's not well confirmed yet. If the human body didn't need drinking water or develop cancer, we'd be fine.

[AngelasDaddy0427]

Here in Montana it's 2.29...

Damn I feel lucky... thats so sad...

[NorthSideSox72]

I hate to say this, but...

 

Good. It should be $4 a gallon, if not more.

 

More good than bad will come from higher gas prices, at this point in our country's history. It will suck for all of us in the meantime, but it will force changes that are desperately needed for our long term success and survival.

[Balance]

I hate to say this, but...

 

Good.  It should be $4 a gallon, if not more.

 

More good than bad will come from higher gas prices, at this point in our country's history.  It will suck for all of us in the meantime, but it will force changes that are desperately needed for our long term success and survival.

That's probably the only way we'll see real emphasis on efficiency and conservation, as well as alternate forms of energy. Lord knows, it won't happen because of anything this presidential administration does.

[BigSqwert]

I hate to say this, but...

 

Good.  It should be $4 a gallon, if not more.

 

More good than bad will come from higher gas prices, at this point in our country's history.  It will suck for all of us in the meantime, but it will force changes that are desperately needed for our long term success and survival.

You hit that one on the head. Kind of like this-->

[Rex Kickass]

Actually a throw away paragraph saids it all in the middle of the story.

More government regulations are most likely to blame for the decrease in supply.

 

That's a direct difference from what I'm saying though. I'm not talking about changing chemicals in gasoline, I'm talking about requiring oil companies who receive corporate welfare from our government, like ExxonMobil among others, to spend a portion of their money maintaining and creating new refineries and processing centers so that supply can better meet demand.

[Rowand44]

Cinny should be fun..... :puke

Ay, who votes that only Steve pays for gas?

[IlliniKrush]

Ay, who votes that only Steve pays for gas?

Two votes.

[Chisoxfn]

So Crude Oil inventories are up. But the price for crude is higher?

 

At what point is our government going to come in and force some of these oil companies who control the production and distribution of a necessary product for our security and economy to actually build the refineries we need to increase capacity?

Last I checked environmentalist were preventing us from building more refineries.

[Chisoxfn]

Cinny should be fun..... :puke

You guys are going to be at the Great American park too. Ahh f*** and to think i was going to get away from you all