Gas Prices Rise, Energy Futures Mixed

Gasoline prices extended their advance at the pump Friday, while gas futures fell again on a growing sense that supplies are catching up to demand.

Oil futures jumped on concerns about supply disruptions in the North Sea.

The national average price of a gallon of gas rose another 2 cents overnight, to $3.046 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures markets, have risen steadily since bottoming out at $2.949 a gallon last week. Prices peaked at $3.227 a gallon in late May.

Analysts attribute much of the recent increase to price spikes in the Midwest and Plains states caused by the closure of a 108,000 barrel-per-day refinery in Coffeyville, Kan., due to flooding, and of a 250,000 barrel-per-day piece of equipment in Whiting, Ind., due to a leak. BP PLC's Whiting refinery is expected to be back at full production by next week, while officials in Coffeyville are still assessing damage.

Strong consumer demand is also playing a role, analysts say. In a report this week, the Energy Department's Energy Information Administration said demand for gas grew last week, to 9.6 million barrels a day, 1.4 percent higher than the same period last year. But gasoline inventories jumped by 1.2 million barrels, almost double analyst predictions of a 640,000-barrel increase.

There are signs price increases could soon end, or at least slow. News that Whiting's shutdown was temporary sent gas futures down more than 10 cents over the past three days, and cut spot wholesale prices 28 cents a gallon in the Chicago area Thursday, analysts say. Retail gas prices dropped 6.3 cents in Illinois overnight.

But AAA and OPIS data show that prices are still rising elsewhere. Gas prices in Indiana, for instance, jumped 5.2 cents overnight, while prices in Kansas rose by 3 cents. Elsewhere, prices are inching higher. Prices rose by less than a cent, for example, in Pennsylvania, New Jersey and California overnight, by 1.7 cents in Florida and by 1.6 cents in Texas.

In futures trading, light, sweet crude for August delivery advanced $1.15 to $73.65 a barrel on the New York Mercantile Exchange. August Brent gained $1.01 to $77.41 a barrel on the ICE Futures exchange in London.

Gasoline for August delivery fell 3.74 cents to $2.2289 on the Nymex.

Nymex heating oil prices rose 1.43 cents to $2.11 a gallon, and natural gas futures gained 15.2 cents to $6.649 per 1,000 cubic feet.

Nymex oil futures were trading higher in sympathy with Brent, analysts said.

"We've had a shut down of a pipeline in the North Sea," said Kevin Saville, managing editor for the Americas energy desk at Platts, the energy research arm of the McGraw-Hill Cos.

That has Brent traders worries that some oil supplies might be cut, Saville said.

Oil prices were also supported by a report Friday from the International Energy Agency saying global energy consumption will likely rise at its fastest clip in recent years in 2008 but high oil prices persisting above $70 a barrel may steadily eat away at demand.

The report wasn't surprising, but did contribute to a "bullish tint on the market," Saville said.

While oil prices were commanding attention, traders continued to warily eye the tumble gasoline futures have taken this week.

"It is a gripping move that commands our further attention," wrote Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, in a research note.

In earlier sessions this week, attempts by crude traders to push oil prices higher were curbed by sharp drops in gasoline futures. Analysts say traders of one energy commodity have a hard time ignoring strong moves in another commodity.

"Gasoline inventories are starting to look almost adequate," said Michael Lynch, president of Strategic Energy and Economic Research Inc., in Winchester, Mass.