Crude oil prices jump
NEW YORK – Oil futures jumped to a new record above $97 a barrel Tuesday after a bombing in Afghanistan and an attack on a Yemeni oil pipeline compounded the supply concerns that have driven crude prices higher in recent weeks.
Those concerns were also fed by a government prediction Tuesday that domestic oil inventories will fall further this year while consumption rises.
At the pump, meanwhile, gas prices continued to rise, following oil’s 39 percent price rally since August. The national average price of a gallon of gas jumped 2 cents overnight to $3.024 a gallon, according to AAA and the Oil Price Information Service. In Spokane, the average price of a gallon of regular gas was $3.20 Tuesday; in Coeur d’Alene, it was $3.08, according to AAA.
Separately, the federal Energy Information Administration reported that diesel fuel prices reached a national average of $3.303 a gallon, a new record.
Light, sweet crude for December delivery rose $2.72 to settle at a record $96.70 a barrel Tuesday on the New York Mercantile Exchange after earlier rising as high as $97.10, a new trading record.
Oil’s seemingly relentless climb raises the question of how high energy prices will go. If crude does keep going up, it might be some time until consumers see relief at the pump. Some analysts predict prices could rise as high as $3.50 to $4 a gallon next summer.
The Energy Information Administration is predicting gas prices will remain above $2.90 a gallon for the rest of the year, and will set a new record national average of $3.235 a gallon by May. In May 2007, prices peaked at $3.227 a gallon as refiners, faced with a series of unexpected outages, struggled to produce enough gas to meet demand.
Meanwhile, estimates of where oil is headed from here range from $50 a barrel to $120. Some analysts believe supplies will get tighter as the year wears on, supporting prices. Others argue that prices have been driven artificially higher by speculative investing.
The EIA expects crude oil prices to rise from an average of $71.36 a barrel this year to $79.92 a barrel next year.
On Tuesday, oil was already up before news of the blast in northern Afghanistan that killed at least 28 people and the attack in Yemen. Severe weather forecasts for the North Sea, expectations that domestic crude supplies fell last week and the weak dollar all contributed to the latest move upward.
While Afghanistan doesn’t produce much oil, traders watch for the possibility that any escalation in the conflict there between U.S. armed forces and Islamic militants could spill over into other countries, disrupting oil supplies out of the Middle East.