Commodity Corner: Oil, Gasoline End the Week Higher

August oil futures surged by $2.51 Friday, stoked by fears that a developing tropical system in the Caribbean Sea would enter the Gulf of Mexico and disrupt oil production.

The price for a barrel of oil settled at $78.86 Friday, compared to $76.35 the previous day. The National Hurricane Center in Miami reported Friday afternoon that the low-pressure area between Honduras and Grand Cayman had become better organized, and the agency gave the system an 80% probability of becoming a tropical cyclone by Sunday afternoon. The storm was slowly following a west-northwest track as of 2 p.m. Friday and was expected to reach the Yucatan Peninsula within two days.

The National Hurricane Center was also monitoring a second, less organized system east of the Leeward Islands that was moving northwest at 10 to 15 mph. The system's outlook for development into a tropical cyclone within 48 hours was only 20% at press time. During Friday's trading, oil peaked at $78.92 and bottomed out at $75.90. Crude ended the week up $1.04 from Monday's settlement price.

Contributing to oil's strong performance Friday was the view that summer gasoline demand was finally getting a boost as the July 4th holiday nears. On Thursday, AAA forecast that the number of Americans traveling over the holiday weekend would be 17.1% percent higher than the figure for 2009 -- 34.9 million motorists versus 29.8 million last year. July gasoline futures gained eight cents to settle at $2.17 a gallon after trading from $2.08 to $2.16. Gasoline settled three cents higher for the week.

July natural gas futures were also on the upswing Friday, settling 11 cents higher to $4.86 per thousand cubic feet. The intraday trading range for natural gas was $4.74 to $4.81. Compared to Monday's settlement price, natural gas ended the week down by one penny.