Oil prices surpass $120 a barrel
Crude soars to new heights after attack on Nigerian oil installation,
raids in Iraq; pump prices dip a cent.
NEW YORK -- Oil futures have surpassed the once unthinkable price of
$120 a barrel Monday as supply threats emerged overseas and the dollar
weakened against the euro.
At the pump, however, the average national price of a gallon of
regular gas slipped to $3.611 a gallon on Monday, 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 ****ps, 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.
Light, sweet crude for May delivery rose to a trading record of
$120.21 a barrel on the New York Mercantile Exchange.
"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] ex****t terminal over the weekend," said Addison
Armstrong, director of market research at Tradition Energy in
Stamford, Conn., in a research note.
Warnings of suicide attacks
Kurdish rebels on Monday warned they could launch suicide attacks
against American interests to punish the United States 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 ****pments 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 pu****ng 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
Ex****ting 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.
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