Oil tops $100, falls back
The price of oil fell Thursday as traders took profits from a record rally that had pushed it two days in a row to $100 a barrel, a level that raised a red flag over global economic growth.
U.S. crude settled down 44 cents at $99.18 a barrel on the New York Mercantile Exchange after hitting a peak of $100.09 earlier in the day. The surge above $100 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%, since early November as imports slowed and foul weather on the Gulf Coast hindered shipments.
Thinning inventories, soaring demand from China, geopolitical turmoil and a weak dollar have collided to push crude prices up more than 70% over a year ago.
The surge in oil prices has darkened the economic outlook in the U.S. -- 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 said at a news briefing.
Thursday’s gains added to a nearly 4% gain Wednesday that was triggered by violence in Nigeria’s oil region, further threatening supplies from the world’s eighth-largest crude exporter.
Exacerbating the situation Thursday, Mexico’s main export ports remained closed after foul weather hit this week. Mexico is among the top three suppliers of oil to the United States.
Oil prices could push even higher this year along with other commodities, analysts say.
“Short term, the mixed data caused the choppy trading, but overall it’s going higher long term,” said Mark Waggoner, president of Excel Futures Inc. “I expect crude to be at $120 [a barrel] by June.”
Despite oil hitting $100, the International Energy Agency echoed the White House in saying there was no need to release emergency crude oil.
President Bush said in an interview that he was concerned about $100 oil but saw no reason yet to tap the Strategic Petroleum Reserve. He said the reserve was “available for emergencies, terrorist attacks, massive dislocations.”
