Oil prices climb to record above $75 a barrel, pump prices seen rising to $3 nationwide

WASHINGTON — Oil prices jumped to a record above $75 a barrel on Wednesday, propelled by a rally in gasoline that analysts said could send average U.S. pump prices past $3 a gallon by the weekend.

Recent snags in oil-shipping and refining along the Gulf Coast have raised traders' concerns about motor-fuel supplies at a time when demand continues to rise in spite of soaring prices. The start of a new fiscal quarter also brought more speculative money into the market, brokers said.

"Everybody thought we'd hit a price that would create permanent demand destruction. But demand for gasoline is rising," said Alaron Trading Corp. analyst Phil Flynn. "Once again the American public has shown its ability to get over paying high prices for gasoline."

A protracted diplomatic standoff between the West and Iran, OPEC's No. 2 oil supplier, has kept a high floor underneath prices, and analysts said geopolitical tensions were heightened further on Wednesday by North Korea's test-firing of missiles.

Light sweet crude for August delivery briefly surged to $75.40 a barrel on the New York Mercantile Exchange before easing back to $75.20, an increase of $1.27. Gasoline futures jumped by more than 6 cents to $2.284 a gallon.

With refiners fetching the equivalent of $95 a barrel or more — there are 42 gallons in a barrel — "one doesn't have to be disciplined in the buying of crude," explained Tom Kloza, an oil analyst at Oil Price Information Service in Wall, N.J.

The last time front-month oil futures settled above $75 was on April 21. The previous intraday high, also set April 21, was $75.35.

Oil prices are now roughly 26 percent higher than a year ago, but still below all-time inflation-adjusted highs of around $90.

The average retail price of gasoline is $2.93 a gallon, according to OPIS. But Kloza said pump prices are likely to surpass $3 a gallon as early as this weekend.

U.S. retail gasoline prices peaked at $3.07 a gallon, on average, last September, reflecting the extreme tightness in the market following Hurricane Katrina, which knocked out pipelines that deliver fuel to the East Coast and Midwest.

With global oil demand approaching 85 million barrels per day, traders are extremely nervous about the possibility of any supply disruptions, especially because there is less than 2 million barrels a day of spare production capacity, most of it in Saudi Arabia.