Following is a summary of top stories in the energy sector Friday afternoon.
Crude Continues to Climb
Oil rose again, as traders kept buying on the belief that prices will just keep setting new records.
Light, sweet crude for June delivery gained $2.17 to settle at $126.29 on the New York Mercantile Exchange. Crude shot up to $127.82 a barrel, a new record, earlier in the session.
The market showed little reaction to the Energy Department's announcement that it will cancel shipments into the Strategic Petroleum Reserve for six months beginning July 1.
Motorists are now paying more than ever for gasoline with the national average for a gallon of regular at nearly $3.79, according to AAA and the Oil Price Information Service.
Diesel prices also have risen to record levels, meaning that even Americans who don't drive will likely pay more for all sorts of goods because of higher shipping costs. A gallon of diesel now sells for $4.482.
In Nymex trading, gasoline futures jumped to a record $3.2438 a gallon before settling at $3.2235, up 5.77 cents. Heating oil futures rose 8.04 cents to settle at $3.7028 a gallon. Natural-gas futures fell 30.5 cents to settle at $11.094 per 1,000 cubic feet.
Goldman Raises Oil Price Forecast
Goldman Sachs commodities analysts raised their forecast for the average price of West Texas crude in the second half of 2008 by $34 to $141 a barrel.
"The current oil market is experiencing a structural repricing much like it did in 2004-2005. After remaining stable for more than two years, the longdated oil price (five-year forward) is once again driving the oil market," Goldman said.
"As the rise in long-dated prices drags spot prices to ever higher levels, speculators, a weakening U.S. dollar, and 'risk premiums' of all kinds have once again been looked to in order to explain a market that seemingly defies fundamentals."
Goldman says it will take some time for the oil market to reach supply and demand equilibrium, but oil prices cannot rise forever. "Eventually a price will be reached which incentivizes significant conservation, new technologies and political solutions which will eventually cap the price rises and allow large scale investment. However, until that point is reached, the risks remain skewed to the upside."
Saudis Keep Firm Hold on Oil Production
On his second visit to Saudi Arabia this year, Saudi leaders told President Bush they see no reason to increase oil production until customers demand it.
Saudi oil minister Ali al-Naimi said the kingdom decided on Saturday to raise production by 300,000 barrels, at the request of customers, and that increase was sufficient.
According to the Organization of Petroleum Exporting Countries, Saudi Arabia produces about 9 million barrels of oil a day, and is the largest oil producer in the world.
Saudis and ConocoPhillips Press on With Refinery Deal
Saudi Arabian Oil Co., or Saudi Aramco, and ConocoPhillips approved continued funding for development of a refinery in Yanbu, Saudi Arabia, on the Red Sea.
The project will create a 400,000 barrel-per-day refinery to process Arabian heavy crude. Startup is set for 2013. Both companies will be responsible for marketing one-half of the refinery's production.
Initial evaluation and front-end engineering and design is done. The next phase of the project includes bid solicitation and site preparation work.
ConocoPhillips and Saudi Aramco plan a joint venture company to own and operate the refinery.
Exco Boosts Its Capital Budget
Oil and natural-gas producer Exco Resources Inc.'s board approved a $123 million increase in its 2008 capital budget, to $923 million.
The increase includes $90 million for the more drilling in the company's Haynesville Shale position in Louisiana, $30 million for additional drilling in its Vernon Field in Louisiana, $2 million for additional Cotton Valley drilling in Texas and $1 million for information-technology initiatives, Exco said.
More U.S. and Canadian Rigs Working
The number of rigs actively exploring for oil and natural gas this week in the U.S. rose by 16 from last week.
Of the rigs 1,862 rigs running, 1,471 were exploring for natural gas, 381 for oil and 10 were listed as miscellaneous, according to Houston-based Baker Hughes Inc., which tracks rig operations worldwide.
A year ago, the rig count stood at 1,744.
Of the total, 69 rigs operate offshore _ mostly in the Gulf of Mexico. That is unchanged from last week, down six from a year ago.
In Canada, 132 rigs are running, up 10 from last week and down 11 from a year ago.
--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.
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