The world oil price broke through the $100 barrier over the holidays, drawing words of concern from world leaders before ducking back below the psychologically important mark.
Futures for the U.S. benchmark WTI crude blend climbed to an all-time high of $100.9 per barrel Thursday after touching an even $100 the day before.
After falling for three days, morning trading in London on Tuesday put the price at $95.43 per barrel for delivery in February, a modest rise.
The high price -- and the breaching of the $100 mark -- is good news for Russia, which is looking to spend its windfall oil revenues on raising salaries and pensions and on high technology.
Thursday's price rise came after the U.S. Energy Information Administration reported that commercial crude stockpiles continued to fall and reached their lowest level in three years in the last week of 2007. Crude stocks in the United States have dropped more than 25 million barrels, or nearly 8 percent, since early November, including the most recent drop of 4 million barrels.
The price upturn was bolstered by foul weather that blocked ports in Mexico, a chief oil supplier to the United States, on Thursday and earlier in the week. That and a breakout of violence in the main oil port of Nigeria, the world's eighth-largest crude supplier, had already racked up prices Wednesday.
The price rolled back under $100 the same day it set the new record. The drop came in reaction to fears of recession in the United States generated by the announcement by U.S. Labor Department that the country's unemployment rate had reached a two-year high of 5 percent.
U.S. President George W. Bush was just one world leader who expressed his concerns over oil's climb above $100.
Futures for the U.S. benchmark WTI crude blend climbed to an all-time high of $100.9 per barrel Thursday after touching an even $100 the day before.
After falling for three days, morning trading in London on Tuesday put the price at $95.43 per barrel for delivery in February, a modest rise.
The high price -- and the breaching of the $100 mark -- is good news for Russia, which is looking to spend its windfall oil revenues on raising salaries and pensions and on high technology.
Thursday's price rise came after the U.S. Energy Information Administration reported that commercial crude stockpiles continued to fall and reached their lowest level in three years in the last week of 2007. Crude stocks in the United States have dropped more than 25 million barrels, or nearly 8 percent, since early November, including the most recent drop of 4 million barrels.
The price upturn was bolstered by foul weather that blocked ports in Mexico, a chief oil supplier to the United States, on Thursday and earlier in the week. That and a breakout of violence in the main oil port of Nigeria, the world's eighth-largest crude supplier, had already racked up prices Wednesday.
The price rolled back under $100 the same day it set the new record. The drop came in reaction to fears of recession in the United States generated by the announcement by U.S. Labor Department that the country's unemployment rate had reached a two-year high of 5 percent.
U.S. President George W. Bush was just one world leader who expressed his concerns over oil's climb above $100.
Japanese Prime Minister Yasuo Fukuda said Friday that the impact of high oil prices could not be ignored and that his government would continue doing its best to ease the pain from high energy costs.
"Oil prices have finally risen above $100. I think it is temporary, but we cannot ignore its impact," Fukuda told a news conference.
Finance Minister Alexei Kudrin said Russia, which channels most of its oil revenues into its Reserve Fund and National Welfare Fund, would refrain from spending any additional income immediately to prevent a surge in inflation.
"We'll have more money," Kudrin said on Rossia television Thursday. "We will spend it gradually and according to a plan."
The Reserve Fund will remain a safety net against a drop in oil prices, while the National Welfare Fund will focus on helping people boost their retirement savings, he said.
"This money will not go running around in the economy, but will be set aside and serve gradually as people retire," he said.
The State Duma is also planning to pass a bill to hike salaries for teachers, doctors and other workers paid from the federal budget, starting next month.
The oil prices to help make this possible may remain high despite growing evidence that the U.S. economy might be headed for -- or is already in -- a recession. Officials from the Organization of the Petroleum Exporting Countries, said the group could do little to halt a rally.
Organization of the Petroleum Exporting Countries will likely refrain from any significant output rise at its next meeting February 1, said Timur Khairullin, an analyst at Antanta Capital.
"There's no shortage of oil on the market," he said. "The high prices are conditioned by other factors." Prices will likely remain high and break the $100 mark repeatedly, he said, adding that the United States will remain the largest oil importer despite its economic woes.
"Having been surpassed once, this level is quite likely to be surpassed further on," he said.
"Oil prices have finally risen above $100. I think it is temporary, but we cannot ignore its impact," Fukuda told a news conference.
Finance Minister Alexei Kudrin said Russia, which channels most of its oil revenues into its Reserve Fund and National Welfare Fund, would refrain from spending any additional income immediately to prevent a surge in inflation.
"We'll have more money," Kudrin said on Rossia television Thursday. "We will spend it gradually and according to a plan."
The Reserve Fund will remain a safety net against a drop in oil prices, while the National Welfare Fund will focus on helping people boost their retirement savings, he said.
"This money will not go running around in the economy, but will be set aside and serve gradually as people retire," he said.
The State Duma is also planning to pass a bill to hike salaries for teachers, doctors and other workers paid from the federal budget, starting next month.
The oil prices to help make this possible may remain high despite growing evidence that the U.S. economy might be headed for -- or is already in -- a recession. Officials from the Organization of the Petroleum Exporting Countries, said the group could do little to halt a rally.
Organization of the Petroleum Exporting Countries will likely refrain from any significant output rise at its next meeting February 1, said Timur Khairullin, an analyst at Antanta Capital.
"There's no shortage of oil on the market," he said. "The high prices are conditioned by other factors." Prices will likely remain high and break the $100 mark repeatedly, he said, adding that the United States will remain the largest oil importer despite its economic woes.
"Having been surpassed once, this level is quite likely to be surpassed further on," he said.
By Anatoly Medetsky
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