Crude prices climbed for the third consecutive session in New York Friday on news of increased instability in the Middle East and higher gasoline prices in domestic markets. The May contract for light sweet crude oil climbed 59 cents to $62.28 a barrel. Reformulated gasoline edged 3 cents higher to $1.99 a gallon, but heating oil slipped a penny to $1.71 a gallon. Natural gas fell 3 cents to $7.29 per million British thermal unit. Energy futures were rattled in early trading on news that 15 British Navy sailors were detained at gunpoint by Iranian soldiers while they were boarding an Iranian cargo ship. The British Foreign Ministry says that its sailors were operating in Iraqi territorial waters, but Iran insisted they were in Iranian waters. Iraq and Iran have long been involved in a territorial dispute over the waters separating the two countries. Crude oil prices climbed 4.1% this week. The increase was caused by tight oil product supplies, according to Jason Schenker, economist at Wachovia. The Energy Information Administration released new gasoline inventory figures on Wednesday that were more bullish than analysts had expected. The futures curve for reformulated gasoline is currently inverted, with near-term prices sitting higher than prices for contracts further out. This suggests that recent decreases in oil imports and refinery utilization rates are having a detrimental effect on gasoline inventories.
Retail gasoline prices rose more than 25 cents in the Los Angeles metroplex after Exxon Mobil ( XOM) announced that production was cut at its 150,000 barrel-per-day refinery there, further heightening concerns over gasoline inventories. "Bullish inventory figures were the primary cause of this week's hike in energy prices, rather than the geopolitical issues that were in the news," Schenker said. As evidence of this, Schenker pointed to the difference between Thursday's $2.08 increase in crude prices -- spurred by inventory concerns -- and the smaller gain to end the week following the worries about Iran. "Daily volatility isn't important when analyzing trends in energy futures markets," Schenker said. "Look at what happens over a number of days, rather than only focusing on what happens in one trading day." Meanwhile, energy stocks were mostly stronger at the close of trading. The CBOE Oil Index was up 0.6% at 652.36. ConocoPhillips ( COP) rose 0.9%, Chevron ( CVX) traded 1.1% higher, and Exxon added 0.9%. Spectra Energy ( SE) was upgraded by BMO Capital Markets to outperform from market perform, and its stock gained 1.5% higher to $25.58. Shares of Dominion Resources ( DOM) were upgraded by A.G. Edwards to hold from sell, giving it a 7% lift to $25.82. Among downgrades, Trans Canada Pipelines ( TRP) was cut by BMO Capital Markets to market perform from outperform, sending the stock down 0.8% at $33.53.