GO
Loading...

Oil Closes at Record $99.62 After Hitting $100 a Barrel

Oil closed at a record $99.62 a barrel after briefly hitting $100, as violence in Nigeria, tight energy stockpiles and a weaker dollar triggered a surge of speculative buying.

Locals ride a canoe past oil instalations belonging to the Mobil oil company in Bonny Island, Nigeria, Thursday, Aug. 17, 2006. Militant groups using kidnappings and sabotage attacks to press their demands for a share of the region's oil wealth, which they accuse the central government of stealing, have made southern Nigeria a volatile place. (AP Photo/George Osodi)
Locals ride a canoe past oil instalations belonging to the Mobil oil company in Bonny Island, Nigeria, Thursday, Aug. 17, 2006. Militant groups using kidnappings and sabotage attacks to press their demands for a share of the region's oil wealth, which they accuse the central government of stealing, have made southern Nigeria a volatile place. (AP Photo/George Osodi)

Oil's climb to the psychologically key triple-digit price sent stocks tumbling on Wall Streetand darkened an already gloomy economic outlook in the United States, battered by a housing crisis and credit crunch.

"Oil hitting $100 a barrel has sparked some concerns about the consumer and inflation," said Todd Salamone, vice president of research at Schaeffer's Investment Research.

U.S. light sweet crude for February delivery gained $3.64 Wednesday to close Nymex trade at $99.62 -- after having crossed $100 during the day.

London Brent crude followed the move higher.

"Oil could rise further from here. It's simple supply and demand fundamentals," said Kris Voorspools, energy analyst at Fortis in Brussels.

The White House said it would not open up the emergency crude oil reserve to lower prices, while an OPEC member said the cartel was powerless to bring the market down from its lofty height.

Suspected militant attacks on Tuesday in Nigeria's oil city Port Harcourt have heightened concern over the potential for further disruptions in shipments from the world's eighth-largest oil exporter.

"With the military and the militant warlords engaged in a violent tit-for-tat, the risk for oil disruptions in Nigeria remains higher than in the past few months," said Olivier Jakob of Petromatrix.

Frequent attacks by militant groups since February 2006 have driven thousands of foreign oil workers from the oil-rich Niger Delta and cut oil exports by about 20 percent.

Oil rose nearly 58 percent last year, the biggest annual gain this decade, rallying strongly in the fourth quarter to touch a record $99.29 a barrel on Nov. 21 as the dollar fell and U.S. oil inventories sank.

Investors will also be particularly sensitive to any signs of further fund investment in commodities at the start of the year as the sector rebounded from a loss in 2006, with the broad Reuters/Jefferies CRB Index up nearly 17 percent in 2007.

Further drops in U.S. fuel stocks were anticipated. Weekly data will be released on Thursday, a day later than usual due to the New Year holiday.

Stocks of crude in the United States were expected to have fallen 1.8 million barrels last week, the seventh straight week of decline, as refiners processed more crude, according to a Reuters poll.

Distillate stocks, which include heating oil and diesel, were forecast to have increased by 300,000 barrels after three weeks of decline, the survey showed.

Contact Commodities

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More