NEW YORK (AP) -- Gasoline prices were poised Monday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Oil prices, meanwhile, surged to $107, a new inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories.
The national average price of a gallon of gas rose 0.7 cent overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as surging demand and a string of refinery outages raised concerns about supplies.
That record will likely be left in the dust soon as gas prices accelerate toward levels that could approach $4 a gallon, though most analysts believe prices will peak below that psychologically significant mark. In its last forecast, released last month, the Energy Department said prices will likely peak around $3.40 a gallon this spring; a new forecast is due Tuesday.
Retail gas prices are following crude oil, jumped 24 percent in a month on its way to setting new inflation-adjusted records four times last week. On Monday, crude prices surged to yet another record after the Commerce Department said wholesale sales jumped by 2.7 percent in January, their biggest increase in four years, according to Dow Jones Newswires.
The strong sales report suggested to oil traders that the struggling economy may be doing better than thought.
Light, sweet crude for April delivery rose $1.55 to $106.70 on the New York Mercantile Exchange after earlier setting a new trading record of $107.
Energy investors shrugged off a relative stabilization of the dollar and a cooling in tensions between Venezuela and its neighbors Colombia and Ecuador.
Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
"We've got a Fed(eral Reserve) meeting on the 18th that could see a sizeable rate cut," said Brad Samples, an analyst with Summit Energy Services Inc., in Louisville, Ky. "So, it's not over."
Indeed, while the dollar fluctuated against the euro on Monday, many investors believe the greenback is likely to keep falling as the Fed continues to cut rates. Many analysts believe the rise in crude prices is not supported by the market's underlying fundamentals, noting that supplies are generally rising while demand is falling.
"By gobbling up everything in sight, (investors) are pushing food and fuel prices to ruinously high levels," said Peter Beutel, president of the energy risk management firm Cameron Hanover, in a research note.
Investors shrugged off a weekend cooling of tensions in South America, where Venezuela said Sunday it was restoring full diplomatic ties with Colombia after they were broken off following a cross-border Colombian attack on a leftist rebel camp in Ecuador.
Last week, rebels shut down a Colombian oil pipeline in retaliation for the Colombian raid into Ecuador. Venezuela threatened to slash trade and nationalize Colombian-owned businesses, and Venezuela and Ecuador briefly sent troops to their borders with Colombia.
The potential for conflict involving Venezuela, an OPEC member and major U.S. oil supplier, helped push oil higher last week.
"The Venezuelan production was at risk there," Samples said.
Other energy futures were mixed Monday. April heating oil futures rose 1.58 cents to $2.9628 a gallon while April gasoline futures fell 0.48 cent to $2.6895 a gallon.
April natural gas futures slid 4.5 cents to $9.724 per 1,000 cubic feet.
In London, Brent crude futures rose 50 cents to $102.88 a barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.
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