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Gasoline prices soar

to five-year highs

NEW YORK: Gasoline futures closed at the highest levels in five years Friday on fears of tight supplies moving into the summer driving season.

Some grain prices pushed to new highs but many other commodity markets fell on profit-taking.

The Knight Ridder Commodity Research Bureau Index of 17 commodity futures fell 0.36 point to 261.45.

May unleaded gasoline at the New York Mercantile Exchange closed at 76.81 cents a gallon, up 1.20 cents, after rising to a high of 77.00 cents.

The U.S. Energy Department forecasts a 2.0 percent rise in gasoline demand this summer, but recent regulations requiring cleaner-burning gasoline have also increased costs and reduced refiner flexibility, especially on the East and West Coasts.

"The wire services hummed with stories about tight gasoline supplies in California and the popular press put gasoline stories on the front pages," Pegasus Econometric analyst Tim Evans said.

Even President Clinton weighed in, suggesting high retail gasoline prices were due to wholesale market speculation.

U.S. Senate majority leader, Bob Dole, called on Clinton to lift the 4.3 cents per gallon gasoline tax to ease prices.

"Once again the oil industry is evil," said Tom Knight, a petroleum products trader at Fina Inc., the U.S. unit of Belgium-based Petrofina SA. "Is anyone demanding an investigation into why corn prices are at a record?"

Buoyed by gasoline, May heating oil ended up 0.51 cent at 59.27 cents and June crude oil ended up 12 cents at $22.32 a barrel.

At the Chicago Board of Trade, tight stocks of wheat pushed the May contract to a 20-cent-bid limit close and a new contract high was set, traders said.

"Strength in the May is keeping the market from dropping. It was real choppy, back and forth, and next week will be more of the same," said Vic Lespinasse of Dean Witter Reynolds.

Forward contracts from July onward closed sharply lower on profit-taking. But traders said poor weather could supply more fuel for buying next week.

Corn was also hit by profit-taking but still set a new all-time high for the seventh straight day. May corn closed 8-1/2 cents per bushel higher at $5.07-1/2, cracking the $5 per bushel barrier for the first time ever.

At the Chicago Mercantile Exchange lumber futures posted new contract highs on strong construction demand before profit-taking trimmed gains. May lumber closed $2.30 higher at $349.00 per thousand board feet.

Western mills reported strong bookings from lumber dealers and the Random Lengths Framing Lumber Composite, a key market indicator, rose to $385, its highest since February 1995.

Copper, another key industrial commodity, also closed weaker after a mid-week rally to 5-1/2 month highs. July copper closed 0.20 lower at 120.70 cents a lb.

Traders expect the market to continue drawing support in coming weeks on signs of tight supplies and good Asian demand.

There was less consensus on the longer-term outlook, however, with some analysts doubtful demand would be buoyant enough to absorb an expected rise in supplies later this year.-Reuter