Oil Prices Bounce Back

NEW YORK -- Oil prices rallied Friday, sparked by a surge in gasoline futures that could send the average retail cost of gasoline above $2.25 a gallon within a few weeks, the Associated Press reported.

After climbing as high as $57.49 a barrel, light, sweet crude for May delivery was up $1.55 to $56.95 a barrel on the New York Mercantile Exchange in afternoon trade. The Nymex intraday peak of $57.60 was set on March 17, while the highest settlement price on record was $56.72 a barrel, set on March 18.

Oil prices are now 67 percent higher than a year ago, but still well below the inflation-adjusted high above $90 a barrel set in 1980.

Oil analyst Marshall Steeves of Refco Group Inc. in New York said the rally in fuel prices is "overdone."

"I don't think the sky's the limit," Steeves said. "At some point, there'll be some impact on demand. But where that price is, is hard to determine."

At the moment, gasoline demand is up about 2 percent from a year ago and the average retail price of unleaded gasoline is $2.15 a gallon, according to the Energy Department.

On Friday, gasoline futures rose more than 5 cents to $1.715 a gallon. Gasoline futures are up 14 cents, or 9 percent, over the past three days.

Tom Kloza, director of Oil Price Information Service, said the recent surge in gasoline futures means average U.S. pump prices are likely to rise above $2.25 a gallon within a few weeks.

However, Kloza added, "That's not to say that the market is acting in a justified, dignified and appropriate manner. It hasn't been doing that for a while."