Oil spikes above US$70 for first time this year

Oil prices broke through the $70 per-barrel barrier Friday and more forecasters are broadening expectations for an upward swing in crude.
Benchmark crude for July delivery lost 37 cents to settle at $68.44 on the New York Mercantile Exchange, finishing the week with a gain of nearly $2 a barrel.
Earlier in the day oil jumped as high as $70.32 per barrel, the highest since October.
Oil prices have been soaring for months despite a massive surplus of petroleum and natural gas. A large amount of speculative money has flowed into the markets, according to government reports, potentially taking advantage of a weak U.S. currency.
Surging energy prices appear to be outpacing an economic recovery for now, and there are concerns that consumers may pull back spending further, especially with retail gasoline nearing the $3 mark.
"That everyday, in-your-face experience of seeing higher gas prices at the pump; that has quite an impact on people's psyche," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
"There's this feeling of 'here we go again' with what happened last year," Kloza said.
"It hurts discretional spending.
"It leaves people to think about not taking those summer vacations."
This week, Goldman Sachs revised its forecast and predicted that oil would rally to $85 a barrel by the end of the year as the economy stabilizes and OPEC production cuts take hold.
The forecast assumes, however, that the Organization of Petroleum Exporting Countries will stick to its cuts - and that has never been a sure bet.
Yet even news that could be perceived as negative on the surface has brought more money into oil markets.
The Labor Department said Friday that employers cut 345,000 jobs in May, the fewest since September.
On Thursday, it said the nation's unemployment rolls fell for the first time in 20 weeks.
Still, the unemployment rate was 9.4 percent in May, the highest level in more than 25 years.
One of the reasons that gasoline costs nearly $1.40 per gallon less than last year are the massive layoffs the have millions fewer people commuting to work.
Signs that major employers such as manufacturers, and consumers are suffering badly continues to arrive in government energy reports.
Industrial and residential natural gas consumption plunged in March, according to an Energy Department report this week.
Storage facilities continue to swell with huge stocks of unused crude and natural gas. Analyst Stephen Schork noted that 14 GM factories will be idled because of the automaker's bankruptcy.
"That is another 450 football fields worth of power and Btu demand that is about to go missing from the market," he said.
In other Nymex trading, gasoline for July delivery fell less than a penny to settle at $1.9546 and heating oil dropped 1.39 cents to settle at $1.7701 a gallon.
Natural gas for July delivery rose 5.8 cents to settle at $3.868 per 1,000 cubic feet.