Prices of crude oil briefly hit record of $100 per barrel

1/3/2008

NEW YORK - Crude oil prices briefly soared to $100 a barrel yesterday for the first time, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will outstrip supplies.

Surging economies in China and India fed by oil and gasoline have sent prices soaring in the last year, while tensions in oil-producing nations such as Nigeria and Iran have made investors nervous and invited speculators to drive prices even higher.

Violence in Nigeria helped give crude the final push to $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 sites were closed because of rough weather added to the gains, as did a report that OPEC may not be able to meet its share of global oil demand by 2024.

Light, sweet crude for February delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange, according to Brenda Guzman, a Nymex spokesman, before slipping back to settle at a record close of $99.62, up $3.64.

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 White House said it would not release oil from the nation's strategic reserves to drive prices lower. "This President would not use the [Strategic Petroleum Reserve] to manipulate [prices] unless there was a true emergency," White House Press Secretary Dana Perino said.

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 domestic inventories. However, post-holiday trading volumes were about 50 percent of normal yesterday, meaning the price move likely was exaggerated by speculative buying.

Many of the concerns about supply disruptions have yet to materialize, but that hasn't stopped buyers from driving prices higher.

At the pump yesterday, gas prices rose to a national average of $3.049 a gallon, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have edged higher in recent days as oil approached $100 a barrel.