Oil sets new record high above $112

Oil prices have set a new record today, trading through the previous record of $111.80 and moving as high as $112.21 in reaction to this week's inventory report.

As Joseph Lazzaro discussed earlier, today's move has been in reaction to this week's inventory report out of the Energy Department earlier today that showed both oil and gasoline inventories dropped unexpectedly last week. Analysts had been looking to see oil inventories swell by 2.3 millions, but the report actually showed that inventories dropped by a massive 3.15 million barrels.

Gasoline inventories also fell more than expected last week (3.4 million barrels, as opposed to the 2.3 million analysts were expecting to see) which will only apply more upwards price pressure gasoline prices. Gasoline prices are predicted to move up close to $3.60 a gallon by the middle of the summer, while some analysts are already predicting to see them creep even higher, possibly up close to $4 a gallon.

Overnight, the national average set yet another new record, climbing 1.2 cents to $3.343.

If you are sitting at home and hoping to see some relief at the pumps, I would not hold my breath. It looks like we are in for a long, expensive summer when it comes to filling up our tanks at the gas station.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.