Crude Oil Futures on the New York Mercantile Exchange Hit $100 a Barrel for 1st Time Ever

Ouch!
Crude Oil Futures on the New York Mercantile Exchange Hit $100 a Barrel for 1st Time Ever http://biz.yahoo.com/ap/080102/oil_prices.html?.v=8
NEW YORK (AP) -- Oil prices soared to $100 a barrel Wednesday for the first time ever, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will continue to outstrip supplies.
ADVERTISEMENT 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.
Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange before slipping back, according to Brenda Guzman, a Nymex spokeswoman.
Word that several Mexican oil export ports were closed due to rough weather added to the gains.
In Nigeria, bands of armed men invaded Port Harcourt, the center of the oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Four policemen, three civilians and six attackers were killed. The Niger Delta Vigilante Movement claimed responsibility for the attack.
"Although the 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.
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.
Still, the warning gave investors pause, said Amanda Kurzendoerfer, an analyst at Summit Energy Services Inc. in Louisville, Ky.
"They're talking about, in 20 years, not being able to meet demand," Kurzendoerfer said.
Light, sweet crude for February delivery rose $3.38 to $99.36 a barrel on the New York Mercantile Exchange Wednesday. News of the Mexican port closures added to the supply concerns, pushing crude futures as high as $99.60, a new trading record. The three ports handle most of Mexico's 1.7 million barrels of daily exports.
Oil last traded over $99 a barrel on Nov. 26, a few days after rising to a previous record high of $99.29. 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.
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.
At the pump, meanwhile, gas prices rose 0.6 cent Wednesday 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 has approached $100.
Gas prices peaked at $3.227 a gallon in May as refiners faced unprecedented maintenance issues and struggled to produce enough gasoline to meet demand. A similar scenario is expected this spring, when gas prices could peak above $3.40 a gallon, according to the Energy Department's Energy Information Administration.
But until the production rises in the spring to meet summer driving demand, gasoline prices will follow oil's lead, analysts say. Oil prices have risen in recent weeks in part on concerns about supply disruptions in Iraq and Nigeria, and as domestic inventories have fallen for several weeks in a row.
Inventories likely fell last week by 1.8 million barrels, according to the average estimate of analysts surveyed by Dow Jones Newswires. That expectation was also pushing oil prices higher, analysts said.
"(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," Kurzendoerfer said.
The EIA'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 9.28 cents to $2.7422 a gallon while February gasoline futures climbed 8.07 cents to $2.5717 a gallon. February natural gas futures advanced 26 cents to $7.743 per 1,000 cubic feet.
In London, February Brent crude rose $3.08 to $97.55 a barrel on the ICE Futures exchange.
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That was more than likely a couple traders playing a game as it was one small trade on the floor while most oil futures are traded electronically. Goes to show how one big money individual can manipulate the market today.

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