NEW YORK Oil prices shot to a record near $127 a barrel Tuesday on concerns that Iran may consider cutting crude oil production.
Gas prices, meanwhile, rose to a record over $3.73 a gallon nationally Tuesday and $3.62 in Utah and their advance shows little sign of slowing with Memorial Day weekend, the traditional start of the summer driving season, just 10 days away.
Light, sweet crude for June delivery rose as high as a record $126.98 a barrel in midday trading on the New York Mercantile Exchange Tuesday before retreating to settle up $1.57 at $125.80.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill., said traders reacted to news reports that Iran's government is considering cutting crude-oil production. James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and OptionSellers.com, said the news quickly made its way around trading floors.
In later news reports, Iranian officials denied that production cuts were imminent, but said a reduction has been discussed. Cordier doubts Iran will actually cut oil production. The nation's economy is in bad shape, Cordier said: "They need all the petrodollars they can get."
At the pump, meanwhile, the national average price of a gallon of regular gas rose 1.4 cents overnight to a record $3.732, according to a survey of stations by AAA and the Oil Price Information Service. Prices have now risen to the level at which the Energy Department had forecast they would peak in June, on a monthly average basis. That means prices may still go higher, but their average will peak at around $3.73.
Many analysts have predicted prices will surge much higher, and may breach the psychologically important $4 level on a national basis within the next couple of months. Prices are already that high in many parts of the country.
Utah's average of $3.62 per gallon on Tuesday was a record high. The price also was 36 cents higher than it was a month ago, and 42 cents higher than a year ago, AAA Utah reported.
The national price was up 40 cents from last month and 66 cents from last year.
Moab posted Utah's highest average price, at $3.70 a gallon, according to AAA Utah. Logan's $3.65 per gallon was a 40-cent jump from last month the biggest increase statewide. The lowest average price Tuesday was found in Salt Lake City, at $3.54 a gallon.
Gas was selling for an average of $3.67 per gallon in St. George; $3.60 in Vernal; $3.56 in Ogden; and $3.57 in Provo, which saw the smallest price hike 33 cents in the state.
Around the Intermountain West, prices ranged from $3.94 a gallon in California to the national statewide low of $3.52 in Arizona.
Some analysts are beginning to question whether gas prices will follow their typical pattern of peaking around Memorial Day, then declining through the summer.
"Retail prices aren't going to decline as long as any part of the energy complex is heading higher," Ritterbusch said.
Contributing: Jennifer Toomer-Cook, Deseret News