Oil futures shot higher Tuesday, closing above $100 for the first time as investors bet that crude prices will keep climbing despite evidence...
NEW YORK — 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.
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“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 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.
“I really think … crude oil’s going to soar through $100,” Cordier said.
“The refinery fire in Texas is making people a little concerned,” said Michael Lynch, president of Strategic Energy & Economic Research in Amherst, Mass.
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 past month. Traders are instead focused on the Organization of Petroleum Exporting Countries, which could move to cut production in the second quarter, typically a period of low demand.
Associated Press business reporters George Jahn in Vienna and Thomas Hogue in Bangkok contributed to this story.