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Quick Hits: Summer Takes Oil Traders by Surprise


Brief scrutiny of today's headlines

1).jpg" alt="" />Fuel prices hit another record high today on fears the summer driving season will squeeze already strained gasoline reserves. Crude oil jumped by more than $2 per gallon and prices at the pump now average almost $3.40.

The Energy Department forecasts prices will reach as high as $3.60 within the next few months. Many analysts think this estimate is wildly conservative; $4.00 looks like a more realistic peak.

Some investors worry refiners like Exxon Mobil (XOM) and Tesoro (TSO) may see profits drop despite rising fuel prices. Oil is increasingly expensive to pull out of the ground, one reason prices have been driven up in recent years. This is bad news from Big Oil CEOs, who recently did time on Capitol Hill to defend their fat bottom lines.

Unfortunately, the predictability of rising summer oil prices isn't helpful to anyone. Investors can't trade it, buying oil futures in January and selling in May, because the phenomenon is priced in. And motorists can't fight it, because they don't allow bikes on the New Jersey Turnpike during rush hour.

For more on oil prices check out Hoofy & Boo's always astute report.

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