Price surge came as U.S. dollar, in which oil trades, fell to new lows.
Oil prices hit new highs for the year yesterday as the dollar fell to new lows against the euro, showing how much the weak U.S. currency has come to dominate energy markets.
Benchmark crude for December delivery rose $2.25 to settle at $81.37 a barrel on the New York Mercantile Exchange. Prices hit $82 at one point.
The run-up in prices came within minutes of a government report showing that crude-oil supplies in the United States are growing and that refiners are producing little gasoline because consumers are not using as much.
"The dollar obviously is the overriding factor," PFGBest analyst Phil Flynn said.
"It's not about demand, I can tell you that."
Oil is traded in U.S. dollars, so the drop in their value means it takes more of them to buy a barrel of oil.
Refiners are shutting down plants, a combination of little demand and rising crude prices that wipe out profit margins.
That can have real consequences at the pump. The government reported yesterday that gasoline supplies fell more than two million barrels last week.
There is usually a lag between the direction of crude bought and sold on Nymex and the price that people pay for gasoline to fill up their cars.
Crude began to rise Oct. 7, when a barrel cost less than $70. Prices moved higher for eight days in a row, nearly reaching $80.
Average retail gasoline prices started ticking higher one week later, and a gallon has increased every day since, up about 12 cents in one week to a national average of $2.596 yesterday, according to auto club AAA, Wright Express, and Oil Price Information Service. A gallon is still 29 cents less than last year at this time, when gasoline prices were in full retreat.
In Philadelphia and the four surrounding counties in Pennsylvania, the average pump price yesterday was $2.59 a gallon, up 3 cents from Tuesday and 13 cents in the last week, AAA Mid-Atlantic said.
In the three South Jersey suburban counties, yesterday's average gasoline price was $2.42 a gallon, 2 cents higher than on Tuesday and 18 cents more than a week ago.
There are concerns that spiking energy prices could stunt any economic recovery in Europe and the United States. Energy Secretary Steven Chu said Tuesday that crude prices at $80 per barrel right now are worrisome.
Even though the amount of crude in storage is well above normal for this time of year, it seems any movement in the dollar draws more money.
The dollar has lost 16 percent of its value since March and yesterday, someone holding a euro could trade it in for more than $1.50, the most since August 2008.
