Oil Ends at $99.18 After Hitting $100 For 2nd Day

Oil fell Thursday as traders took profits from a record rally that had pushed oil to $100 per barrel two days in a row -- a level that has raised a red flag over global economic growth.

AP

President George W. Bush told Reuters in an interview he was concerned about $100 oil, but saw no reason yet to tap the nation's emergency crude reserve.

"The (Strategic Petroleum Reserve) is available for emergencies, terrorist attacks, massive dislocations and that's what it's there for," Bush said.

U.S. light, sweet crude settled down 44 cents to $99.18 per barrel after hitting a peak of $100.09 earlier in the day.

London Brent crude fell 13 cents to $97.71.

Oil's brief climb above $100 Thursday came after the U.S. Energy Information Administration reported that crude stocks in the world's biggest energy user fell 4.0 million barrels last week to a three-year low.

Crude stocks in the United States have dropped more than 25 million barrels, or nearly 8 percent, since early November as imports slowed down and shipments were hindered by foul weather on the Gulf Coast.

Thinning inventories, soaring demand from China, geopolitical turmoil and a weak dollar have collided to push crude prices up more than 70 percent over a year ago.

The surge in oil prices has darkened the economic outlook in the United States, already battered by a housing crisis, and has threatened economic growth in Europe.

"Oil prices have been increasing significantly. Now if this high level of prices is maintained then it will have an impact on the economy," European Commission spokeswoman Amelia Torres told a news briefing.

Thursday's gains added to a near 4 percent gain Wednesday that was triggered by violence in Nigeria's oil region, further threatening supplies from the world's eighth-largest crude exporter.

Adding support Thursday, Mexico's main export ports remained shut Thursday after foul weather hit this week. Mexico is a top-three supplier of oil to the United States.

Commodities Binge

Oil, which rose by 57 percent in 2007, has scope to push even higher in 2008 along with other commodities, analysts said.

"Short term the mixed data caused the choppy trading, but overall it's going higher long term, said Mark Waggoner, president at Excel Futures. "I expect crude to be at $120 (a barrel) by June."

Gold and platinum also hit record highs Thursday, bolstered by the weakness of the U.S. dollar which has made

dollar-denominated assets relatively cheap. Despite oil rocketing to $100, the Paris-based International Energy Agency (IEA) echoed the White House in saying there was no need for a release of emergency crude stockpiles.

"We are not going to carry out (an emergency) oil stock release," William Ramsay, the IEA's deputy head, told Reuters.

"We don't respond to prices, and we don't see any disruption in the physical oil market."

Officials from the Organization of the Petroleum Exporting Countries, which decided at its last meeting in December to maintain output restrictions, said the group could do little to halt the rally.

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