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Another New High for Oil

The benchmark U.S. crude closes above $41 a barrel again as the May rally rolls on.
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Updated from 12:56 p.m. EDT

Crude oil prices Friday ended at another new high, after closing above the $41 a barrel yesterday for the first time.

The benchmark U.S crude gained 30 cents, or 0.8%, to settle at $41.38 on the New York Mercantile Exchange. Earlier this week, prices surpassed the previous high set in October 1990 after Iraq had invaded Kuwait.

Gasoline futures rose almost one cent to $1.41 a gallon, also a new record high. In April, prices were around $1.13 a gallon.

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Energy prices have been surging for weeks along with rising concerns about supply, triggered by anticipation of the peak summer driving season and industry security in key oil-producing states in the Middle East.

Key OPEC producer Saudi Arabia recently called upon fellow cartel members to increase production by about 6% to head off any possible damage to world economic growth but with most producers already exceeding their official daily production quotas, traders see little positive impact on immediate world supplies.

Some economists are worried that rising gasoline prices, which have broken $2 a gallon in California and other U.S. states, will temper consumer spending as Americans spend more to fill their gas tanks and cut back on discretionary purchases. The most recent producer price index report was higher than expected, largely because of higher energy prices. Higher energy prices will increasingly pass through the economy, raising the cost of many goods and services, as companies pass on higher costs.