Oil Prices Top $100 For First Time Ever

Violence In Nigeria, Rumors Of OPEC Shortfalls And Bad Weather Spark Supply Concerns

(CBS/AP)  Oil prices jumped sharply Wednesday, setting a new trading record and reached $100 a barrel for the first time ever on supply concerns sparked by renewed violence in Nigeria and a warning that OPEC may not be able to meet its share of global oil demand by 2024.

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.

Surging economies in China and India fed by oil and gasoline have also contributed to prices soaring over the past year.

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.

CBS News correspondent Alexis Christoforous said since the futures price quickly fell back after hitting the $100 mark, it's not yet clear if the price is sustainable.

"A part of it could have been a psychological barrier," Christoforous said. "Now that we've hit the $100 dollar a barrel mark, we may start to see prices ease back."

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.

Stocks pulled back Wednesday in as the spike in oil prices, along with a weaker-than-expected reading on the manufacturing sector, triggered concerns of a further slowdown in the overall economy. The major indexes each lost more than 1 percent, with the Dow Jones industrials giving up more than 200 points.

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.

Michael Fitzpatrick, vice president of energy at MF Global, told CBS Radio that consumers will feel the pinch of those higher prices.

"Every time the bumper of the SUV goes across the curb of the driveway to soccer practice or ballet lessons or whatever, it's going to cost more and more and more," Fitzpatrick said.

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.

[underdogus]

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[underdogus]

127 degrees.....haaaaha $$$$$ money out of your POCKET!!!$$$$$$$$$$$$$$$$$$$$$$haaaaaaaa RUN THE A.C...$$$$$$$$$$$$$$$$$$$$$$$$$$$$

[underdogus]

Word that several Mexican oil export ports were closed due to rough weather added to the gains.
CBS reports... yeah and the friggin WEATHER might get worse $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ VIVA MEXICO!!!! you will BURN ARIZONA!!!!!

[underdogus]

JetRanger7 you did complain about the ILLEGALS! now go to ARIZONA you no good white TRASH!!! and pick tomatoes!!!

[underdogus]

just like the fake oil crisis back in the 70s Posted by JetRanger7 at 01:19 PM : Jan 04, 2008
why dont you enlist in the ARMY? you BUM!!!! all you do is complain and b.i.t.c.h!!!! go pick some lettuce in ARIZONA!!! you B.A.S.****!!

[jetranger7]

Why I don''t hear any of you whinning or complaining or saying 1 word about the Fraud, Corruption, Collusion by the Big Oil Companies and the Corporate lobbyist,, let me guess, you don''t think that kind of atmosphere exists - right !!! Everything is just on the honest up and up and everythings just peachy ! Better wake up morons and see the light, their blowin lots of Smoke up Your-Azzes !!!!! Its all smoke & mirrors , just like the fake oil crisis back in the 70s !!!!

[gunownerdan]

When gas is $10 a gallon, will it be enough to end our addiction to fossil fuels?
It will end sooner or later and the sooner the better.

[mbcsmith]

I''ll bet all the LIBS here biotching about gas prices STILL don''t want to open the Alaskan reserves. That moose you THINK you are saving is costing you a pretty penny.

[underdogus]

BUILD THE FENCE!!!! I DARE YOU!!!!

[underdogus]

ARIZONA: HOW DO YOU LIKE ME NOW?