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Analysts have long argued that the slide was due to end and that prices were likely to start following futures prices higher. Futures have rallied in recent weeks on concerns about domestic refining capacity.
It's unclear how much prices will rise. Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, said the overnight increase is almost all attributable to price jumps in Plains and some Rockies states. Supplies there have been cut by the flooding and closure of a refinery in Coffeyville, Kan., that can produce 2.1 million gallons of gasoline per day.
"They just lost about one-seventh of their gasoline supply for the summer," Kloza said.
However, if retail gas prices are destined to follow futures higher, then they're likely to keep rising. Oil and gasoline futures rose Friday on continuing concerns about violence and kidnappings in Nigeria and a sense that domestic refiners are struggling to produce enough gas.
Light, sweet crude for August delivery gained $1 to settle at $72.81 a barrel on the New York Mercantile Exchange. That was the front-month contract's highest settlement since Aug. 15. August Brent crude rose 87 cents to $75.62 a barrel on the ICE Futures exchange in London.
August gasoline rose 2.53 cents to settle at $2.3096 on the Nymex.
Nymex heating oil futures rose 0.78 cent to $2.0951 a gallon, while natural gas prices fell 17.4 cents to settle at $6.444 per 1,000 cubic feet. The government reported that natural gas inventories rose by 78 billion cubic feet last week, in line with analyst expectations.
Oil prices reached nearly one-year highs this week, rising 3 percent from last Friday's settlement price of $70.68. That was the front-month contract's first close above $70 since August.
Many analysts think technical trading could send oil prices even higher in the short term.
"I wouldn't be surprised to see a run at ... $78.40," a the highest-ever intraday price for a front-month crude contract, set last July 14, said Linda Rafield, senior oil analyst at Platts, the energy research arm of the McGraw-Hill Cos.
But there is a sense among others that prices can't stay this high for long.
"We're getting close to a peak here," Kloza said.
Crude inventories are at nine-year highs, noted Addison Armstrong, an analyst at TFS Energy Futures LLC in Stamford, Conn.
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 "Profit-taking and a pull-back may be on the cards," Armstrong wrote in a research note.
In Nigeria, kidnappers on Friday threatened to kill a 3-year-old British girl abducted on Thursday if their demands aren't met. While the girl's father does not work in the oil industry, the kidnapping came on the heels of an attack on a Royal Dutch Shell PLC oil rig by gunmen on Wednesday. Five foreign workers were seized.
Traders had hoped the situation in Africa's largest oil-producing nation would stabilize following the May election of President Umaru Yar'Adua. The Nigerian news drove Brent crude futures higher, and the rest of the energy complex followed, analysts said.
Traders also focused on a surprisingly small increase in refinery utilization in Thursday's inventory report from the Energy Department's Energy Information Administration. While utilization rose to 90 percent, it's far below the 94 percent to 95 percent most think is necessary to meet peak summer driving demand.
Analysts have worried for months that the refining industry isn't producing enough gas to meet demand. Those concerns have been exacerbated by an unusually high number of refinery outages this year.
Jan Stuart, an analyst at UBS Securities LLC, says the outage situation isn't likely to improve. A new set of refinery inspections planned by the Occupational Safety and Health Administration may make matters worse, Stuart said.
"There is no telling how many more 'unplanned' outages might result from these inspections," Stuart wrote in a research note.
The EIA report also showed surprise increases in both oil and gasoline inventories last week. But crude inventories increased mostly in the states along the Gulf of Mexico, while falling in Cushing, Okla., the Nymex delivery point. Many traders are betting that means demand for crude will grow, at least in Cushing.
"In other words, despite being at a nine-year high, crude oil stocks are falling where it most counts," wrote Stephen Schork, an energy trader, in a research note.
[Associated Press
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By JOHN WILEN]
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