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Oil prices around the world began rising during the first few days of July, when political turmoil erupted in Egypt and worries arose that violence could spread and threaten the flow of oil through the Suez Canal, a major conduit for Middle Eastern oil. While most analysts say it is extremely unlikely that oil supplies will be disrupted, oil traders are concerned enough that they have become more reluctant to sell. When there are fewer willing sellers, prices rise quickly. Still, analysts see signs that the high prices might not last. While U.S. supplies of crude and gasoline have fallen recently, they are still higher than their five-year averages for this time of year. "We would not give too much weight to the larger-than-expected drawdown in US crude stocks in the recent data," wrote Julian Jessop, a commodities analyst at Capital Economics, in a report Wednesday. "Inventories are still unusually high." Jessop wrote that ample supplies and still-sluggish global economic activity "should drag oil prices lower again by the end of the year." Tom Kloza, chief oil analyst at GasBuddy.com, thinks the surge in gasoline demand over the past two weeks may be temporary, brought on by a July 4 holiday that followed terrible spring weather in much of the country. "It was such poor weather for four months that people had cabin fever," Kloza said. He expects demand to moderate in the coming weeks. He also notes that U.S. refiners are making more gasoline than they have since 1997, so supplies should remain high.
Eric Lee, an oil analyst at Citigroup, had expected oil prices to rise this summer as refiners around the world drew down oil supplies so they could ramp up production, but he also expects the price of crude to weaken in the coming months. "We would expect it to stay here in the short term and then ease off in the next month or two," he said. In other energy futures trading on the New York Mercantile Exchange: Wholesale gasoline rose 8 cents to close at $3.01 a gallon. Natural gas rose 2 cents to close at $3.68 per 1,000 cubic feet. Heating oil rose 2 cents to close at $3.00 per gallon.
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