NEW YORK (Jan. 2) - Oil prices soared to $100 a barrel Wednesday for the first time ever, reaching that milestone amid an unshakable view that global demand for oil and petroleum products will continue to outstrip supplies.
Photo Gallery
George Osodi, AP
It Takes the World To Break Oil's Record
1 of 4
After months of flirting with the $100 per barrel price tag, it's violence in Nigeria's oil center, Port Harcourt, that gets the credit in the end for pushing the market to a new record.
Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher.
Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria's oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains.
Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange, according to Brenda Guzman, a Nymex spokeswoman, before slipping back to $99.48.
Crude prices, which have flirted with $100 for months, have risen in recent days on supply concerns exacerbated by Turkish attacks on Kurdish rebels in northern Iraq and falling inventories in the U.S.. However, post-holiday trading volumes were about 50 percent of normal Wednesday, meaning the price move was likely exaggerated by speculative buying.
"I would imagine the speculators are the biggest drivers today," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.
It is hard to say whether prices would have risen as quickly on a normal trading day, Flynn said. While crude prices have soared on mounting supply concerns in recent months, speculators have often been cited as a reason for the swiftness of oil's climb.
Moreover, many of the concerns about supply disruptions have yet to materialize, but that has not stopped buyers from driving prices higher.
"Although the (Nigerian) violence has not impacted oil flow out of the country, it has reignited supply concerns as militant attacks have reduced Nigeria's crude output by roughly 20 percent since 2006," said John Gerdes, an analyst at SunTrust Robinson Humphrey in a research note. Nigeria is Africa's largest oil producer.
On top of those concerns, investors are anticipating that crude inventories fell by 1.8 million barrels last week, which would be the 7th weekly decline in a row.
"(A decline) is not anything unusual for this time of year, but when it happens for 7 weeks in a row, it starts to add up," said Amanda Kurzendoerfer, an analyst at Summit Energy Services Inc. in Louisville, Kentucky.
Word that several Mexican oil export ports were closed due to rough weather added to the gains.
Separately, the Organization of Petroleum Exporting Countries said its member nations may not be able to meet demand as early as 2024, though OPEC also said that deadline could slide for decades if members increase production more quickly.
Oil prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
The U.S. Energy Information Administration's inventory report, delayed until Thursday this week due to the New Year's holiday, is also expected to show gains in gasoline supplies and refinery activity, and a decline in supplies of distillates, which include heating oil and diesel.
In other Nymex trading Wednesday, February heating oil futures rose 9.06 cents to $2.74 a gallon while February gasoline futures climbed 7.92 cents to $2.57 a gallon. February natural gas futures advanced 26.7 cents to $7.75 per 1,000 cubic feet.
In London, February Brent crude rose $3.11 to $97.58 a barrel on the ICE Futures exchange.
Associated Press Writers George Jahn in Vienna and Gillian Wong in Singapore contributed to this report.
swif said
19:36 01/02 2008
this is a bunch of B.S. the only reason for 100 dollor a barrel oil is speculaters! the only reason
Photo Gallery
It Takes the World
To Break Oil's Record
After months of flirting with the $100 per barrel price tag, it's violence in Nigeria's oil center, Port Harcourt, that gets the credit in the end for pushing the market to a new record.
Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria's oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains.
Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange, according to Brenda Guzman, a Nymex spokeswoman, before slipping back to $99.48.
Crude prices, which have flirted with $100 for months, have risen in recent days on supply concerns exacerbated by Turkish attacks on Kurdish rebels in northern Iraq and falling inventories in the U.S.. However, post-holiday trading volumes were about 50 percent of normal Wednesday, meaning the price move was likely exaggerated by speculative buying.
"I would imagine the speculators are the biggest drivers today," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.
It is hard to say whether prices would have risen as quickly on a normal trading day, Flynn said. While crude prices have soared on mounting supply concerns in recent months, speculators have often been cited as a reason for the swiftness of oil's climb.
Moreover, many of the concerns about supply disruptions have yet to materialize, but that has not stopped buyers from driving prices higher.
"Although the (Nigerian) violence has not impacted oil flow out of the country, it has reignited supply concerns as militant attacks have reduced Nigeria's crude output by roughly 20 percent since 2006," said John Gerdes, an analyst at SunTrust Robinson Humphrey in a research note. Nigeria is Africa's largest oil producer.
On top of those concerns, investors are anticipating that crude inventories fell by 1.8 million barrels last week, which would be the 7th weekly decline in a row.
"(A decline) is not anything unusual for this time of year, but when it happens for 7 weeks in a row, it starts to add up," said Amanda Kurzendoerfer, an analyst at Summit Energy Services Inc. in Louisville, Kentucky.
Word that several Mexican oil export ports were closed due to rough weather added to the gains.
Separately, the Organization of Petroleum Exporting Countries said its member nations may not be able to meet demand as early as 2024, though OPEC also said that deadline could slide for decades if members increase production more quickly.
Oil prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
The U.S. Energy Information Administration's inventory report, delayed until Thursday this week due to the New Year's holiday, is also expected to show gains in gasoline supplies and refinery activity, and a decline in supplies of distillates, which include heating oil and diesel.
In other Nymex trading Wednesday, February heating oil futures rose 9.06 cents to $2.74 a gallon while February gasoline futures climbed 7.92 cents to $2.57 a gallon. February natural gas futures advanced 26.7 cents to $7.75 per 1,000 cubic feet.
In London, February Brent crude rose $3.11 to $97.58 a barrel on the ICE Futures exchange.
Associated Press Writers George Jahn in Vienna and Gillian Wong in Singapore contributed to this report.