"There's a good chance this week that we'll see some record highs," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., said.
A record-breaking year for energy futures ended quietly on Monday, with oil futures declining 2 cents to settle at $95.98 a barrel on the New York Mercantile Exchange.
Oil reached a trading record of $99.29 on Nov. 21, and remains close to the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
Crude futures averaged $72.41 in 2007, compared with $66.25 in 2006, and had their the biggest percentage gain since 1999, when prices more than doubled to $25.60 a barrel.
Crude futures surged in 2007 as demand from booming economies in Asia surged while American motorists continued to hit the road in record numbers, sending gas prices above $3 a gallon for the 3rd straight year. Other factors influencing energy prices were the West's standoff with Iran over its nuclear program, attacks by Nigerian rebels on that oil-rich nation's crude infrastructure and Turkish attacks on Kurdish rebels in northern Iraq, which sparked concerns that the rebels would retaliate by attacking an oil pipeline. The recent assassination of Pakistani opposition leader Benazir Bhutto has exacerbated worries about global instability.
Pump prices averaged $2.79 a gallon in 2007, compared with $2.57 a gallon in 2006, a gain of 8.6 percent. Higher prices are cutting demand growth. The Energy Department's Energy Information Administration recently cut its global demand growth projections for oil to 87.2 million barrels a day from an earlier forecast of 87.5 million barrels a day. The EIA left domestic gasoline demand growth projections for next year unchanged at 1 percent.
At the same time, the EIA estimated that oil prices will average nearly $85 a barrel in 2008, while gasoline prices will average $3.11 a gallon, peaking above $3.40 a gallon in the spring.
For oil companies, this hasn't been the bonanza one would expect. Oil companies buy the oil they refine into gasoline, diesel and heating oil, meaning they suffer if the price of those products doesn't keep up with the price of oil. And while all three products rose sharply in price this year, those increases lagged oil's spurt.
The nation's three largest oil companies, Exxon Mobil Corp., Chevron Corp. and ConocoPhillips, had combined profits of $50.3 billion in the first nine months of the year, a decline of 8.5 percent from a year earlier.
Traders chalked up Monday's oil price decline to weak home-sales data - a concern for U.S. economic growth - and the stronger dollar. Crude futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Gasoline futures for January delivery rose 1.61 cents to settle at $2.4758 a gallon on the Nymex on Monday, while January heating oil futures rose 0.74 cent to settle at $2.6444 a gallon. Both contracts have set new price records in recent weeks on supply concerns.
At the pump, meanwhile, gas prices rose 4.6 cents over the weekend to a national average of $3.046 a gallon, according to AAA and the Oil Price Information Service. Gas prices are following the lead of crude futures, which have risen 8.6 percent in December.
In other Nymex trading, February natural gas futures rose 9.7 cents to settle at $7.483 per 1,000 cubic feet.
In London, February Brent crude fell 3 cents to settle at $93.85 a barrel on the ICE Futures Exchange.
