Crude oil rose to a record $100.10 a barrel in New York on speculation Organization of Petroleum Exporting Countries will cut production when it meets next month. Gasoline and heating oil also reached records as investors poured money into energy markets.
The Organization of Petroleum Exporting Countries, set to meet on March 5, may cut output as winter heating demand wanes, oil ministers from Algeria and Iran said in the past week. Oil also rose as a weakening dollar prompted some traders to invest in commodities as a hedge against inflation.
``Prices are primarily up because Organization of Petroleum Exporting Countries will more than likely cut production in two weeks,'' said Richard Chimblo, manager of global business development at Calgary-based Genoil Inc. ``Organization of Petroleum Exporting Countries is concerned about the outlook for a slowing global economy and demand.''
Crude oil for March delivery rose $4.51, or 4.7 percent, to settle at $100.01 a barrel at 2:55 p.m. on the New York Mercantile Exchange. It was a record closing price. Futures reached $100.10, the highest intraday price since trading began in 1983.
Today was the third time oil has reached $100. Oil rose to a then-record $100.09 a barrel in New York on Jan. 3, a day after touching $100 for the first time on militant attacks in Nigeria, Africa's biggest producer.
``My short-term target is $105 to $110,'' said Rob Kurzatkowski, a futures analyst at OptionsXpress Holdings Inc., a Chicago-based online brokerage. Prices won't breach $110 because ``Organization of Petroleum Exporting Countries will back off and give dovish statements if prices rise much further. They don't want prices much higher, destroying demand for their product.''
Brent crude for April settlement rose $3.65, or 3.9 percent, to close at a record $98.56 a barrel on London's ICE Futures Europe exchange. The contract reached an intraday record of $98.70 a barrel today.
OPEC Policy
Organization of Petroleum Exporting Countries, whose members produce more than 40 percent of the world's oil, left output quotas unchanged at a meeting Feb. 1. Oil demand may drop 1.8 million barrels a day in the second quarter amid a U.S. economic slowdown, refinery shutdowns and lower fuel consumption at the end of winter, Chakib Khelil, Algeria's oil minister and president of Organization of Petroleum Exporting Countries, said on Feb. 13.
``There's been a big flow of capital into the commodity markets, especially energy, over the last 8 to 10 days,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``The energy markets should be full steam ahead.''
The dollar fell to the lowest level in two weeks versus the euro on speculation the Federal Reserve will keep cutting U.S. interest rates. The dollar fell as low as $1.4757, the weakest since Feb. 5.
Refinery Explosion
Gasoline and heating oil surged after an explosion yesterday shut Alon USA Energy Inc.'s Big Spring, Texas, refinery. The facility can process 70,000 barrels of crude oil a day. Alon said in a statement that its goal is to resume partial operations in about two months.
``The reaction to the shutdown of such a small refinery shows how nervous people are,'' McGillian said.
Gasoline for March delivery climbed 10.93 cents, or 4.4 percent, to close at a record $2.6031 a gallon in New York. Futures touched $2.61, a record intraday price. The contract, which covers gasoline to be blended with ethanol, known as RBOB, began trading in October 2005.
Pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 1.8 cents to $3.032 a gallon yesterday, AAA, the nation's largest motorist organization, said today on its Web site. Prices touched a record $3.227 a gallon on May 24.
Heating oil for March delivery rose 11.45 cents, or 4.4 percent, to $2.7614 a gallon in New York, a record close. Futures reached $2.766, the highest intraday price since trading began in 1978.
The Organization of Petroleum Exporting Countries, set to meet on March 5, may cut output as winter heating demand wanes, oil ministers from Algeria and Iran said in the past week. Oil also rose as a weakening dollar prompted some traders to invest in commodities as a hedge against inflation.
``Prices are primarily up because Organization of Petroleum Exporting Countries will more than likely cut production in two weeks,'' said Richard Chimblo, manager of global business development at Calgary-based Genoil Inc. ``Organization of Petroleum Exporting Countries is concerned about the outlook for a slowing global economy and demand.''
Crude oil for March delivery rose $4.51, or 4.7 percent, to settle at $100.01 a barrel at 2:55 p.m. on the New York Mercantile Exchange. It was a record closing price. Futures reached $100.10, the highest intraday price since trading began in 1983.
Today was the third time oil has reached $100. Oil rose to a then-record $100.09 a barrel in New York on Jan. 3, a day after touching $100 for the first time on militant attacks in Nigeria, Africa's biggest producer.
``My short-term target is $105 to $110,'' said Rob Kurzatkowski, a futures analyst at OptionsXpress Holdings Inc., a Chicago-based online brokerage. Prices won't breach $110 because ``Organization of Petroleum Exporting Countries will back off and give dovish statements if prices rise much further. They don't want prices much higher, destroying demand for their product.''
Brent crude for April settlement rose $3.65, or 3.9 percent, to close at a record $98.56 a barrel on London's ICE Futures Europe exchange. The contract reached an intraday record of $98.70 a barrel today.
OPEC Policy
Organization of Petroleum Exporting Countries, whose members produce more than 40 percent of the world's oil, left output quotas unchanged at a meeting Feb. 1. Oil demand may drop 1.8 million barrels a day in the second quarter amid a U.S. economic slowdown, refinery shutdowns and lower fuel consumption at the end of winter, Chakib Khelil, Algeria's oil minister and president of Organization of Petroleum Exporting Countries, said on Feb. 13.
``There's been a big flow of capital into the commodity markets, especially energy, over the last 8 to 10 days,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``The energy markets should be full steam ahead.''
The dollar fell to the lowest level in two weeks versus the euro on speculation the Federal Reserve will keep cutting U.S. interest rates. The dollar fell as low as $1.4757, the weakest since Feb. 5.
Refinery Explosion
Gasoline and heating oil surged after an explosion yesterday shut Alon USA Energy Inc.'s Big Spring, Texas, refinery. The facility can process 70,000 barrels of crude oil a day. Alon said in a statement that its goal is to resume partial operations in about two months.
``The reaction to the shutdown of such a small refinery shows how nervous people are,'' McGillian said.
Gasoline for March delivery climbed 10.93 cents, or 4.4 percent, to close at a record $2.6031 a gallon in New York. Futures touched $2.61, a record intraday price. The contract, which covers gasoline to be blended with ethanol, known as RBOB, began trading in October 2005.
Pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 1.8 cents to $3.032 a gallon yesterday, AAA, the nation's largest motorist organization, said today on its Web site. Prices touched a record $3.227 a gallon on May 24.
Heating oil for March delivery rose 11.45 cents, or 4.4 percent, to $2.7614 a gallon in New York, a record close. Futures reached $2.766, the highest intraday price since trading began in 1978.
By Mark Shenk
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