Oil Closes Above $100 For First Time

Price Jumps On A Texas Refinery Outage And Possible OPEC Production Cut

(AP)  Oil futures shot higher Tuesday, closing above $100 for the first time as investors bet that crude prices will keep climbing despite evidence of plentiful supplies and falling demand. At the pump, gas prices rose further above $3 a gallon.

There was no single driver behind oil's sharp price jump; investors seized on an explosion at a 67,000 barrel per day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela.

The fact that there was no overriding reason for such a price spike could be a bad omen for consumers already bearing the burdens of high heating costs and falling real estate values. Many recent forecasts have said oil demand growth this year will be less than initially expected, yet prices continue to rise. That suggests they may continue rising as the weakening dollar attracts new investors to the futures market.

And rising oil prices mean higher gas prices.

"As the economy weakens, it's going to be met with $3.50 and $3.60 gasoline," said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm. "And that really spells trouble for the consumer."

Light, sweet crude for March delivery rose $4.51 to settle at a record $100.01 a barrel on the New York Mercantile Exchange after earlier rising to $100.10, a new trading record. It was the first time since Jan. 3 that oil had been above $100.

Oil prices are still 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.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

"I really think ... crude oil's going to soar through $100," Cordier said.

At the pump, meanwhile, gas prices jumped 1.8 cents to a national average price of $3.032 a gallon Tuesday, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, are following oil prices higher. The Energy Department and many analysts expect gas prices to peak this spring well above last May's record of $3.227 a gallon.

Gasoline and heating oil prices appeared to lead Tuesday's wide advance in energy prices due to the explosion Monday at Alon USA's Big Spring, Texas, refinery, which could be shuttered for two months.

"The refinery fire in Texas is making people a little concerned," said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Amherst, Mass.

March gasoline jumped 10.93 cents to settle at a record $2.6031 a gallon, and March heating oil rose 11.45 cents to settle at $2.7614 a gallon, also a record.

A threat by a rebel group in Nigeria to escalate attacks on the nation's crude oil infrastructure helped boost oil prices. The rebels were acting in response to rumors that the government had killed a captured leader, whom authorities later said was safe and well. Militant attacks have cut about 20 percent of Nigeria's crude output in recent years.

For the moment, investors appear to have put aside concerns about the economy that have sent oil prices down into the mid-$80 range twice in the last month. Traders are instead focused on the Organization of Petroleum Exporting Countries, which will meet early next month to map out production plans, and Venezuela, where President Hugo Chavez made conflicting statements this weekend about the country's legal dispute with Exxon Mobil Corp.

OPEC could move to cut production in the second quarter, typically a period of low demand, though many analysts feel that's unlikely. In Venezuela, Chavez said he was not serious about an earlier threat to cut oil sales to the U.S., but also threatened to sue Exxon Mobil. The world's largest oil company is fighting Venezuela's nationalization of an oil project, and recently convinced several courts to freeze $12 billion in Venezuelan oil assets.

Other energy futures also rose Tuesday. March natural gas jumped 31.7 cents to settle at $8.977 per 1,000 cubic feet. Analysts said prices were supported by forecasts for cooler weather, but that futures were also following oil prices higher.

In London, Brent crude for April delivery rose $3.65 to settle at $98.56 a barrel on the ICE Futures exchange.

[jmagarotz]

Interesting read. Seems that only a couple of you got it right. We were warned 25 years ago that this was going to happen if we didn''t build new refinerys and drill new wells. But NOOO the EV nuts stopped new production and wells at every turn. The libs in DC dumped on big oil and enjoyed their brie and wine,,,, and waited. Tis now time to pay the piper children. Soon you will have a lib president and congress who''ll r*pe big oil. Get ready for $5.00 a gallon taxed gas (IF YOU CAN FIND IT) and rationing at 5 gallons a week per household. Deny it but it''s a coming, and those of you with your "It''s Bush''s Fault" mindset deserve it, every d**n bit of it.

[jerkeedoodle]

luvneverend1,RE:I am a stunning mature woman...Sorry,I like little old ladies myself.Reported for spam.

[jerkeedoodle]

Whew!Good thing Georgiegirl talked the Opeckerheads into upping production.Wait,that didn''t work...

[scottyusa]

This is what happens when we get an oil man in the white house. I haven''t even heard any outcries about investigating why the prices are so high. I guess we are used to it now. Time to start to shoot for that 4 dollar mark.

[Gary Kempf]

Until our Government does something to stop the manipulation of the oil market by speculators,or the oil companies running a system of managed neglect on the exsisting refineries to insure that production of gas and oil are continuiously interupted. They will not stop pushing the price of oil up, it doesn''t matter to them what they are doing to working class families economic structure. Thats just like one of the largest natural gas fields in the world sitting untapped in Alaska, because the oil companies want a additional 5% tax break on top of the exsisting one.
Its extortion, and yet no one in the senate or congress is even making a sound.

[marcpcbs]

Isn''t there some senate committee or something dedicated to making sure that huge greedy conglomerates like the oil companies, don''t run this country into the ground?

[brianbwb-2009]

oops, I meant years, not tears, but what the hey, it almost fits...

[brianbwb-2009]

$38 a barrel then would be worth $96 to $103 or more today.

1980, let us see, who was president then... oh yeah, so it makes sense that the dollar is worth only a third of what it was twenty five years ago. 28 tears, 300% inflation, almost 10% per year, the same as Nixon''s wage and price control limits.

[sgtrds]

gold is $930/oz, at or near record highs ... hmmm, what does that tell you about the dollar ??

Posted by king77shaw at 11:19 PM : Feb 19, 2008

Is that more or less then Bush is paying for his coke?

[sgtrds]

gold is $930/oz, at or near record highs ... hmmm, what does that tell you about the dollar ??

Posted by king77shaw at 11:19 PM : Feb 19, 2008

Is that more or less then Bush is paying for his coke?

[sgtrds]

Like5927

Mark Foley? Is that you?

[king77shaw]

gold is $930/oz, at or near record highs ... hmmm, what does that tell you about the dollar ??

[jw218389]

$100.00 a Barrel!!! YEEHAWWWWW!!!!! YEEEEEEEEEEEEHHHHHHHHAAAAAAWWWWWWW!!

Party at Halliburton tonight!!!

Honored guests, G.W. "Screw America" Bush and *** "I''ll shoot yer A$$ off" Cheney.

HOW CAN THIS HAPPEN WITH TWO OIL BARONS RUNNING THE COUNTRY (into the ground)???

[joyous88]

welcome to the republican faux economy,

republicans are criminals

[mediapreachr]

Posted by donbl1 at 08:03 PM : Feb 19, 2008
Use Google and find out why the indian gov has stopped trading in oil futures.Because it was wrecking their economy.
The only thing those crack smoking monkeys on wall street are doing right now is speculating in oil and commodities.Twenty thousands against 200 mil.citizens.
Who do you think is more important?

[lily1984-2009]

"omg...i have no money to buy oil,can government do something to stop its price."
some funny girls wrote on the forum of tall dating site~~~~~Tallmingle.com .

[rowdytexan2]

http://ostroyreport.blogspot.com/2008/02/help-this-man-find-job.html

[sgtrds]

Big oil is looking to gouge people as much as possible while they still have their trained monkey sitting in the White House. Thanks for nothing Bush, you worthless piece of sh*it!

[donbl1]

Let me see.....

Chavez is the number four exporter of oil to the US
Nigeria is in turmoil
Oil refineries have not been built in the US for 20 yrs.
Economy is UP
India and China demand is WAY up
Wind and solar are no panacea for quick solutions
We can not drill in Anbar
There is no oil shale technology development

And you wonder why we have $100/bl oil....?

[incog-nito]

Mission Accomplished!