Oil Jumps Nearly $4 to Record $119.97 Close

Crude oil futures leaped to a new all-time high above $120 a barrel, as supply concerns grew and the U.S. dollar weakened against the euro. Retail gasoline and diesel prices eased over the weekend, although pricier oil threatens to push them higher again.

Rusty Kennedy / AP

U.S. light, sweet crude for June delivery jumped to a new trading record of $120.36 a barrel on the New York Mercantile Exchange (Nymex), before retreating to settle up $3.65 at a record $119.97.

London Brent crude rose $3.33 to $117.89 in light trade due to a bank holiday in Britain.

Prices were supported by a number of perceived threats to supply overseas. Kurdish rebels warned they could launch suicide attacks against U.S. interests after Turkey bombed rebel bases in Iraq.

In Nigeria, a Royal Dutch Shell spokesman said attackers shut down production after hitting an oil facility at the company's joint venture in the south of the country.

And Iranian Supreme Leader Ayatollah Ali Khamenei said the key oil producer would not bow to international pressure and give up its nuclear program.

At the pump, U.S. regular gas slipped to an average of $3.611 a gallon on Monday, down 1.1 cents from Friday, according to AAA and the Oil Price Information Service.

Natural gas futures rose 40.1 cents to settle at $11.178 per 1,000 cubic feet on the Nymex. June gasoline futures rose 8.65 cents to settle at $3.0529 a gallon, and June heating oil futures rose 8.78 cents to settle at $3.3065 a gallon.

Rethinking Biofuels?

Economist Jeffrey Sachs said the U.S. and European Union should reconsider their emphasis on biofuels made from crops grown on land that had previously been used to produce food. Speaking to reporters before an address to EU lawmakers, Sachs said targets to produce more such fuels "do not make sense now in a global food scarcity condition.

"In the United States, as much as one-third of the maize crop this year will go to the gas tank and this is a huge blow to the world food supply, so these programs should be cut back significantly," said Sachs, the director of the Earth Institute at Columbia University and a special adviser to the United Nations.

Riots have broken out in a number of countries in recent weeks as global food prices have soared. Last month, top international food scientists called for an end to food-based biofuels such as ethanol.

Meanwhile in Washington, 24 Republican senators, including presidential candidate Sen. John McCain of Arizona, sent a letter Friday asking the Environmental Protection Agency to waive or restructure rules requiring a fivefold increase in ethanol production over the next 15 years.

"This subsidized (ethanol) program -- paid for by taxpayer dollars -- has contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world," McCain said in a statement.

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