WASHINGTON (AP) - Crude oil futures rose Friday on strong U.S. gasoline demand ahead of the Independence Day holiday in the U.S. Brokers said energy futures were also being supported by hints from the Federal Reserve on Thursday that it could be done raising interest rates. Societe Generale's director of commodity strategy, Michael Guido, said that by highlighting the role energy prices were playing in helping to slow economic growth to more sustainable levels "it was like giving high energy prices an honorable mention."
The question is now, Guido said, "how much higher do (energy prices) go before it becomes a detriment?"
Light sweet crude for August delivery rose 28 cents to $73.80 a barrel on the New York Mercantile Exchange, where gasoline futures fell by more than 2 cents to $2.2725 a gallon after settling at a nine-month high on Thursday.
"Earlier in the week, the $73 mark has always been considered the resistance level," said Victor Shum, energy analyst at Purvin & Gertz in Singapore. "Now, we've gone beyond that."
Brent crude futures on the ICE Futures exchange climbed 16 cents to $73.04 a barrel.
Worries about a supply crunch ahead of the July Fourth holiday grew after the U.S. government released a report Wednesday showing gasoline stocks shrank last week for the first time in more than two months.
Gasoline demand in the U.S. continues to rise in spite of soaring pump prices. Over the past four weeks, daily gasoline demand was up 0.9 percent from a year ago at 9.4 million barrels a day, according to Energy Department data released Wednesday. The average retail price of regular gasoline nationwide is $2.87 per gallon.
About 40.7 million Americans will travel 50 miles or more from home during the July Fourth holiday, up 1.2 percent from 40.2 million last year, according to projections by the AAA, the largest motor club in the United States.
"In the short-term, there's some momentum for pricing to go up further," Shum said.
The closure of the Calcasieu Ship Channel on the U.S. Gulf Coast has also caused gasoline prices to rise in the past week. A cleanup is under way following an oil spill at a Citgo Petroleum Corp. refinery in Lake Charles, La. The channel was partially reopened Wednesday, raising hopes that normal traffic could resume as early as this weekend.
Oil prices are up about 30 percent from a year ago, driven higher by strong demand and a limited supply cushion—conditions that are worrisome to traders given the backdrop of considerable geopolitical uncertainty, such as violence in Nigeria, the war in Iraq and Iran's diplomatic showdown with the West over its nuclear program.
Iran is OPEC's No. 2 producer of oil, and traders are worried about the outlook for those supplies.
