Oil closes the week down after breaking through $70

Earlier this week we were looking at oil prices, and wondering if we would see the precious crude break through the psychological $70 barrier, and that is exactly what we saw today.

For the first time since last November, oil prices were briefly above $70 today, moving up as high as $70.32 before profit taking pushed oil prices down on the day. We finished up the week at $68.44, down 37 cents.

We were seeing a rally once more in oil following a better than expected report today on May jobless claims. While unemployment did move higher, to a national 9.4% rate, the number of new jobless claims was well below what experts had been expecting to see, another sign that the U.S. may be starting to come out of its current recession.

Prices have definitely been moving sharply higher the past couple of months, and there is really no reason to believe that we should expect a pull back any time soon. Summer months always put a strain on oil supplies as more people on the road traveling and using more gasoline. Gasoline prices have also been moving with oil, with the national average now sitting at $2.59 a gallon. Let's remember that it was not that long ago that most analysts predicted we would top out at $2.50 a gallon during the peak summer months.

Goldman Sachs (NYSE: GS) is now forecasting that we could be looking at oil moving up as high as $85 a barrel by the end of this year. The company believes that the current economic slowdown is going to continue to ease and we are in store for an energy shortage in the months to come. Large oil producers in OPEC, Saudi Arabia in particular have already stated that they believe oil would be reasonably priced somewhere between $75 and $80 a barrel, and this is a level that is not only fair, but one that global economies can bear.

After hitting a fresh 7 month high today, oil was hit pretty hard by profit takers which pushed the prices sharply lower, all the way down to $67.54, but it was able to hold above support at the $67.50 level.

Will oil prices continue to climb next week? Only time will tell, but I would not be surprised to see at least another $2 or $3 jump next week as we continue to move deeper into the heavy summer driving months.

What are you seeing in your part of the country in terms of gasoline prices? Let us hear what you are paying, and if the recent run up in gasoline prices has you second guessing your summer vacation plans.