NEW YORK (AP) — Oil and gasoline prices climbed to 18-month highs Monday as a batch of new economic reports provided more signs that the US economy is back on steady footing and demand for crude will follow.
The worry now among some analysts is whether gasoline pump prices are starting to approach a level that could choke off the recovery.
Benchmark crude for May delivery rose $1.75 to settle at $86.62 a barrel on the New York Mercantile Exchange. On Thursday, the contract climbed $1.11 to settle at $84.87 following a gain of $1.39 on Wednesday.
Global oil trading was closed for the Good Friday holiday.
On Monday, reports on pending home sales and the service sector were better than expected. On Friday, the Labor Department said employers added 162,000 jobs in March, the largest job gain in three years.
Oil, which has been trading between $75 and $85 a barrel for months, now appears to be in a new range that could go up to $95, according to oil trader and analyst Stephen Schork.
That will push retail gasoline prices higher at a time of year when prices tend to rise anyway.
The average US retail price for gasoline hit $2.828 per gallon Monday, an increase of 0.2 cent, according to AAA, Wright Express and Oil Price Information Service. The price has risen 5.2 cents in the past month and now is 78.8 cents a gallon higher than a year ago.
As prices approach $3 per gallon (79 cents a liter), a mark many analysts expect gas will hit over the next few weeks, the worry is that motorists will cut back spending on fuel and elsewhere.
“It’s a price where you start to see demand destruction begin to kick in,” Schork said.
Gasoline prices that hit $4.11 per gallon ($1.08 a liter) in July 2008 helped put the US into the worst recession in decades. Oil prices, which hit $147 a barrel that month, fell to $33 by December. Demand for fuel has yet to bounce back, despite the signs that the economy is getting better.
In other Nymex trading in May contracts, heating oil rose 5.08 cents to settle at $2.2675 a gallon, and gasoline gained 2.65 cents to settle at $2.3502 a gallon. Natural gas picked up 19.1 cents to settle at $4.277 per 1,000 cubic feet.
In London, Brent crude added $1.87 to settle at $85.88 on the ICE futures exchange.