Energy prices bounce back ahead of holiday
SIOUX FALLS, S.D. -- Energy prices resumed their climb into summer driving season Monday, a show of confidence that Americans will overlook dismal economic news as they head out on their Memorial Day weekend trips.
Benchmark crude for June delivery jumped $2.69 to settle at $59.03 a barrel on the New York Mercantile Exchange after dropping $2.28 Friday to $56.34.
With the June Nymex contract expiring Tuesday, the market was also keeping close tabs on the July contract, which rose $2.59 to settle at $59.59.
Retail gas prices have followed along just before the extended holiday weekend.
On Monday, retail gas prices hit $2.31, according to the U.S. Energy Information Administration. That's another high for the year.
Regular unleaded gasoline has jumped about 10 percent this month as refiners try to ratchet down production. Gasoline consumption continues to fall with Americans leery of traveling far from home during a recession, or no longer commuting to work because they've lost jobs.
In context, prices are still $1.48 per gallon below last year's levels, according to government data.
"The economic recovery may come down to miles per gallon as the market is trying to gauge where we are at in this economic recovery," Alaron Trading Corp. analyst Phil Flynn wrote.
A series of reports calling for even less global energy demand last week undercut optimism that a widespread economic recovery was imminent. The International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries all slashed crude demand expectations.
The outlook for the U.S. economy also turned darker last week after dismal news on unemployment and housing. Retail sales fell unexpectedly last month.
Issues that would have had consumer paying more for gas and other fuels last year do not pack the same punch this deep into a recession.
There was also an overnight explosion at a Delaware oil refinery, but it occurred at the refinery's ethylene complex. Flynn said he doesn't think it will have a major effect on oil prices.
"It would be more of a concern if we didn't have so much spare capacity and excess oil out there," Flynn said.
In London, Brent prices rose $2.49 to settle at $57.47 a barrel on the ICE Futures exchange.
In other Nymex trading, gasoline for June delivery jumped 7.75 cents to settle at $1.7581 a gallon and heating oil gained 5.7 cents to settle at $1.4757 a gallon. Natural gas for July delivery rose 4.8 cents to settle at $4.265 per 1,000 cubic feet.