Oil prices spike past US$78 a barrel

Light, sweet crude for September delivery rose by more than a dollar to US$78.21 a barrel on the New York Mercantile Exchange, surpassing the same days' settlement price record of US$77.03. September Brent crude rose to US$77.05 a barrel on the ICE futures exchange in London. Factors that have led to this price hike are: Expectations of a dip in last weeks' crude inventories as refiners continue to increase gasoline production and current reports of violence in Nigeria, including the kidnapping of a construction worker. Gasoline stocks are expected to have increased by 1.1 million barrels, and distillate stocks, which include heating oil and diesel fuel, to have risen 1.4 million barrels. A Vienna based agency noted that "even with such a decline, U.S. crude stocks would remain some 43 million barrels above the five-year average and around 17 million barrels higher than seen in the same week last year." However, it seems that these fundamentals are of little consequence to many speculators. Analysts say large investment funds , many of which trade on technical factors, have pulled money out of gasoline futures and plowed it into oil futures in recent weeks, another factor driving high oil prices and undermining gasoline futures.
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