Oil futures have surpassed the once unthinkable price of $120 a barrel. Oil reached its latest milestone on a mix of threats to overseas crude oil supplies. A threat by Kurdish rebels in Iraq to attack American interests has investors concerned. And an attack on an oil facility in Nigeria cut oil supplies. Meanwhile, defiant comments by Iranian leaders about the country's nuclear program raised worries about broader conflict in the Middle East.
Light, sweet crude for May delivery rose to a trading record of $120.21 a barrel on the New York Mercantile Exchange. The falling dollar is also sending crude prices higher.
At the pump, the average national price of a gallon of regular gas slipped to $3.611 a gallon, down 1.1 cents from Friday, according to AAA and the Oil Price Information Service. Prices peaked at a record $3.623 a gallon on Thursday.
Diesel prices also fell, slipping to a national average of $4.239 from a record $4.251 on Thursday. The runup in prices of diesel, used to power most trucks, trains and ships, is one reason why food prices are so high.
The slight relief motorists are seeing at the pump could end quickly if oil's rise continues. Analysts say gas prices could still go up another 10 cents or so. Indeed, Andy Lebow, senior vice president at MF Global Inc., thinks the gas price declines of the last four days are almost entirely due to crude oil's sharp drop last week; prices fell from a trading record $119.93 on Monday as low as $110.30 on Thursday before rebounding. Gas prices tend to follow prices in the futures market, but with some lag.
This morning, light, sweet crude for June delivery was trading at $119.74 a barrel on the New York Mercantile Exchange after the brief foray over $120.
"The (oil) market is bolstered by news out of Iraq, where Turkish forces have once again been involved in cross-border raids against ... insurgents, and Nigeria, where rebels attacked three oil wells and pipelines feeding (an) export terminal over the weekend," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note. Kurdish rebels on Monday warned they could launch suicide attacks against American interests to punish the U.S. for sharing intelligence with Turkey after Turkey bombed rebel bases in Iraq on Friday. Oil traders worry that any conflict in the oil-rich Middle East will cut oil shipments out of Iraq.
In Nigeria, a Royal Dutch Shell PLC spokesman said attackers hit an oil facility belonging to Shell's joint venture in southern Nigeria and that some oil production has been shut down. Nigeria is a major U.S. crude supplier.
Also pushing oil prices higher were concerns about Iran after Supreme Leader Ayatollah Ali Khamenei said Sunday that his country will not bend to international pressure and give up its nuclear program. Iran is the second largest producer in the Organization of Petroleum Exporting Countries.
Amid the supply worries, the dollar weakened, giving investors even more reason to buy crude. Many investors buy commodities such as oil as a hedge against inflation when the greenback falls. Also, a weaker dollar makes oil cheaper for overseas investors. Analysts blame the dollar's protracted decline for oil's rise to records near $120 this spring. Lebow isn't surprised that oil has come roaring back from its dip to nearly $110 last week.
"It really follows the pattern we've seen throughout this (rally)," Lebow said. "The corrections tend to be pretty short-term in nature."
In other New York Mercantile Exchange trading Monday, June gasoline futures rose 7.24 cents to $3.0388 a gallon, and June heating oil futures rose 9.92 cents to $3.3179 a gallon. June natural gas futures rose 34 cents to $11.117 per 1,000 cubic feet.
Light, sweet crude for May delivery rose to a trading record of $120.21 a barrel on the New York Mercantile Exchange. The falling dollar is also sending crude prices higher.
At the pump, the average national price of a gallon of regular gas slipped to $3.611 a gallon, down 1.1 cents from Friday, according to AAA and the Oil Price Information Service. Prices peaked at a record $3.623 a gallon on Thursday.
Diesel prices also fell, slipping to a national average of $4.239 from a record $4.251 on Thursday. The runup in prices of diesel, used to power most trucks, trains and ships, is one reason why food prices are so high.
The slight relief motorists are seeing at the pump could end quickly if oil's rise continues. Analysts say gas prices could still go up another 10 cents or so. Indeed, Andy Lebow, senior vice president at MF Global Inc., thinks the gas price declines of the last four days are almost entirely due to crude oil's sharp drop last week; prices fell from a trading record $119.93 on Monday as low as $110.30 on Thursday before rebounding. Gas prices tend to follow prices in the futures market, but with some lag.
This morning, light, sweet crude for June delivery was trading at $119.74 a barrel on the New York Mercantile Exchange after the brief foray over $120.
"The (oil) market is bolstered by news out of Iraq, where Turkish forces have once again been involved in cross-border raids against ... insurgents, and Nigeria, where rebels attacked three oil wells and pipelines feeding (an) export terminal over the weekend," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note. Kurdish rebels on Monday warned they could launch suicide attacks against American interests to punish the U.S. for sharing intelligence with Turkey after Turkey bombed rebel bases in Iraq on Friday. Oil traders worry that any conflict in the oil-rich Middle East will cut oil shipments out of Iraq.
In Nigeria, a Royal Dutch Shell PLC spokesman said attackers hit an oil facility belonging to Shell's joint venture in southern Nigeria and that some oil production has been shut down. Nigeria is a major U.S. crude supplier.
Also pushing oil prices higher were concerns about Iran after Supreme Leader Ayatollah Ali Khamenei said Sunday that his country will not bend to international pressure and give up its nuclear program. Iran is the second largest producer in the Organization of Petroleum Exporting Countries.
Amid the supply worries, the dollar weakened, giving investors even more reason to buy crude. Many investors buy commodities such as oil as a hedge against inflation when the greenback falls. Also, a weaker dollar makes oil cheaper for overseas investors. Analysts blame the dollar's protracted decline for oil's rise to records near $120 this spring. Lebow isn't surprised that oil has come roaring back from its dip to nearly $110 last week.
"It really follows the pattern we've seen throughout this (rally)," Lebow said. "The corrections tend to be pretty short-term in nature."
In other New York Mercantile Exchange trading Monday, June gasoline futures rose 7.24 cents to $3.0388 a gallon, and June heating oil futures rose 9.92 cents to $3.3179 a gallon. June natural gas futures rose 34 cents to $11.117 per 1,000 cubic feet.
Source: Associated Press
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