NEW YORK (AP) - Gasoline futures hit a new record trading high of $1.1930 a gallon Thursday in New York as stories ranging from threats to crude supply to a refinery outage fueled traders' fears of insufficient inventories during the peak U.S. summer driving season.
"It looks to me that we will be testing $1.20 eventually," said Phil Flynn, an analyst who trades with Alaron Trading Corp. in Chicago. "We're going into the weekend tomorrow, and with concerns about terrorism, I'd have to say that the bull market's still on."
May gasoline futures settled at a new record of $1.1820 a gallon, up 4.77 cents or 4 percent in open outcry trading on the New York Mercantile Exchange.
June crude oil futures, meanwhile, settled up 98 cents at $36.71 a barrel after touching a high of $37.15 on Nymex.
Despite the spate of bullish news, James Steel, director of New York research for Refco Inc., a futures and options brokerage, said most of the market's gains were due to "short-covering" - buying from traders who had taken positions expecting prices to continue lower but who then had to catch up to the market moving higher.
"The market was concerned about refinery production," Steel said. "It was very confused about whether waivers would be granted or not for sulfur content, and it appears now they won't be. That drove the gasoline up all day. "
Steel said he expects to see a retrenchment Friday in crude and heating oil, which moved higher in sympathy with gasoline.
"Gasoline has a limit to the downside," he added, because of the persistent fear of tight supplies caused both by physical refining restraints and the myriad of refining specifications around the country.
Crude futures, he added, have not been able to climb above $37.50 a barrel, keeping it from the highs of the May contract so far.
Traders said crude futures gained initially on word that saboteurs late Wednesday blew up part of an oil pipeline carrying crude from Iraq's northern oil fields to a Baghdad refinery. An Iraqi Oil Ministry official confirmed the attack Thursday.
Traders have been adding an ill-defined "security risk premium" to prices on fears of unrest in Iraq and the oil-rich Middle East region might spread to affect crude supplies to America.
Gasoline futures added to gains early in the afternoon on reports the Environmental Protection Agency won't relax sulfur requirements to allow more flexibility for foreign refiners to export gasoline.
Then came word that a 48,420 barrels a day fluid catalytic cracking unit at ConocoPhilips' Trainer, Pa., refinery was taken out of service for two weeks of planned turnaround maintenance.
Such refinery outages are seen directly affecting perceptions of tight gasoline supplies ahead of the peak demand U.S. summer driving season.
Crude traders responded bullishly to a news story that producers for the Organization of Petroleum Exporting Countries appear to have slashed 730,000 barrels a day of oil output in April, citing tanker-tracking firm Petrologistics.
Traders have been looking for indications that OPEC members are in fact implementing the 1.9 million daily barrels in cuts from the group's output ceiling announced since late last September.
The announcement of the cuts had been enough at the time to push crude prices to highs not seen since the buildup to the Persian Gulf War.
Lost in the news-led rally was a bearish report from a consultancy that tracks oil tanker movement saying Persian Gulf crude oil shipments to the west were seen high.
Tankers are carrying Persian Gulf oil to the west at levels normally seen only during peak winter demand, Oil Movements said Thursday.
May heating oil futures settled up 3.19 cents at 94.11 cents a gallon after touching a high of 94.90 cents.
May natural gas futures rose by 4.1 cents to $5.623 per 1,000 cubic feet.
On London's International Petroleum Exchange, June Brent blend crude oil futures gained 93 cents to settle at $33.39 a barrel after touching a high of $33.70.