Oil hits 6-month high above $62

By Catherine Clifford

NEW YORK (CNNMoney.com) -- Oil prices rebounded Tuesday to their highest level this year as a triple-digit rally on Wall Street pulled crude off its earlier lows.

Violence in oil-rich Nigeria cut off supply pipelines, contributing to the price lift. At OPEC's upcoming meeting, investors expect the organization will leave production quotas unchanged.

Light, sweet crude for July delivery rose 78 cents, or 1.3%, to settle at $62.45 a barrel Tuesday.

That's the highest settle price since Nov. 5, and the fourth day in a row that oil has settled above $60.

Oil reached as low as $59.53 earlier in the session.

The New York Mercantile Exchange was closed Monday in observance of Memorial day, but oil continued to trade electronically.

Wall Street rally: Oil prices have been taking their cue from the stock market in recent months. Those who see stocks as a measure of overall confidence in the economy believe rising equities will mean healthier demand for oil.

On Tuesday, Wall Street posted strong gains, with the Dow Jones Industrial Average surging more than 200 points on the back of a better-than-expected consumer confidence report.

Meanwhile, movements in the dollar also tracked with oil's price jumps. Early in the Tuesday session, the dollar was gaining handily against other major currencies, as investors poured funds into the traditional safe haven.

But by midway through the afternoon, the dollar had given up some of its earlier advantage, as investors moved funds back to stocks.

Nigeria: The Movement for the Emancipation of the Niger Delta (MEND) said Monday that it had destroyed several major oil pipelines.

The militants said they "put out of operation" a Chevron facility. The group wants Nigeria's oil wealth to be distributed more evenly, with less profit going to politicians they consider corrupt. The supply disruptions boosted the price of oil.

OPEC: The Organization of Petroleum Exporting Countries - whose members produce about 40% of the world's crude - is scheduled to meet Thursday in Vienna.

The group will discuss crude oil production levels. When OPEC reduces production quotas for its member nations, global supply tightens and prices rise.

Starting late last year, OPEC announced reductions of 4.2 million barrels a day, and member nations have cut back. Crude hit a record of $147 a barrel last July, but the global recession pulled crude prices down to just shy of $34 a barrel in December.

Oil prices have been hovering around $60 a barrel in recent sessions, a level that analysts say is a good place for oil to stay for now. In OPEC's coming meeting, the oil market is largely expecting OPEC to hold its production levels steady.

OPEC could be scorned for pushing oil prices too high in the current economic climate. Higher oil prices would pose an additional speed bump for the economy as it tries to recover from recession, and in turn could further diminish demand for energy. A healthier economy demands more oil.

An OPEC cut "would certainly retard any sort of global economic recovery and would therefore extend, or even accelerate, the pace of demand destruction for oil," said Stephen Schork, publisher of industry newsletter The Schork Report, in his daily note.

Price at the pump continues to rise: Even as oil prices fell sharply Tuesday, gas prices continue to march higher. Retail gas prices have climbed for 28 consecutive days, putting pressure on the those travelers who hit the road for Memorial Day.

The national average price for a gallon of regular unleaded gasoline increased to $2.425, up 1 tenth of a cent from the previous day's price of $2.424, according to a daily survey by motorist group AAA.

In the last 28 days, the average price of gas has jumped 37.7 cents or 18.4%. The average price of a gallon of gas is still down $1.68 or 41% from the record high price of $4.114 that AAA reported on July 17, 2008.



Summer travel tips
By Gerri Willis, CNN personal finance editor

NEW YORK (CNNMoney.com) -- More Americans are expected to travel by car this holiday season - an estimated 2.5% more than last year or 27 million people. And, even though gas has jumped by 30 cents a gallon over the past month, it's still far below last summer's $4 a gallon price levels.

Given the fact that prices have been rising at a rate of a penny, to a penny and a half, each day for the last few days, we could see prices in the range of $2.40 that's according to AAA.

The good news - AAA isn't expecting gas prices to rise too much more. Certainly nowhere near last year's levels of more than $4 a gallon. AAA national spokesman Troy Green said he would be surprised if prices hit $3 a gallon this summer because the recession is constraining demand.

Remember, prices usually go up over holidays and during the summer - the question is just by how much.

To find price averages in your area, go to fuelgaugereport.com.Gasbuddy.com and mobgas.com will text message you with the lowest prices in your area so you can compare prices from the road.

There are a lot of great Web sites to inform you about travel conditions - to avoid traffic jams and congestion.

First off, AAA.com will generate a free trip tik (click on "trip tik planner"); travel directions will show you the typical bottlenecks on your route. Using its "route modification tool," you can design a route around the mess.

Check out the Federal Highway Administration's Web site, fhwa.dot.gov, to find out conditions along your route, including commuter forecasts and where the tie ups are. At the site you can also hook up to live traffic cams to see what's going on.

Finally, to get an estimate of your total gas costs on your trip, go to gasprices.mapquest.com, and click on the gas price calculator. (You'll need to know your car's fuel efficiency.)

And a few tips to save money while on the road:

Switch to synthetic motor oil, if you aren't already using it. It costs a little more but it makes your engine more efficient and you'll use less gas.

Also, check your gas cap. About 17% of cars on the road have caps that are damaged or loose, or even missing. That causes gas to vaporize - some 147 million gallons of gas are estimated to be lost into thin air each year.

Finally, you can always book a train. Amtrak is reducing fares for Northeast corridor travels for the summer!