By Ronald D. White
Los Angeles Times Staff Writer
May 6, 2008 As oil passed a record $120 a barrel Monday, retail gasoline prices appeared to be taking a breather from their steep climb. The average price of self-serve regular rose about a penny a gallon during the last week, the Energy Department said Monday. A separate survey by AAA found prices edging lower in recent days.
Does this mean that fuel’s wild spiral has peaked? Not yet, said analysts and experts, who described the latest price readings as a brief lull in a steady increase that probably will continue for at least the next few weeks.
Oil was the primary reason for the pessimism, hitting a new intra-day high of $120.36 a barrel on the New York Mercantile Exchange before closing at a record $119.97, a rise of $3.65. To some market watchers, oil at $125 to $150 a barrel in the near future no longer seemed to stretch the imagination.
“Unfortunately, we will go higher. The markets are still chasing bad news,” said Tom Kloza, chief oil analyst for the Oil Price Information Service, a Wall, N.J.-based price-tracking operation. “The traders are saying, ‘We’ll always have Nigeria.’ “
On Monday, oil traders reacted to an armed attack on a pumping station in the oil-rich African nation that is one of the main suppliers of crude to the U.S.
That attack, which forced Royal Dutch Shell to reduce its output, combined with surging demand for oil in China, India, Russia and the Middle East.
“I still don’t think we have seen the highs or the lows for oil this year,” said Sean Brodrick, a natural resources analyst for Money and Markets, an investment newsletter. “We could see oil at $150 within the next 12 to 18 months.”
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