Oil prices peaked sharply higher Monday, fueled in part by ongoing concerns about dwindling supplies. In New York, crude contracts for December hit an all time high near $94 a barrel. Some energy traders say the latest surge means prices as high as $100 a barrel may not be far off. VOA's Mil Arcega reports.
Uncertainty over crude supplies intensified Monday as nervous traders sent oil prices to new highs. And with demand expected to increase as the temperatures [jn the Northern Hemisphere] turn colder, analysts say prices are likely to remain high for the rest of the year.
"I don't think crude oil is coming off any time soon," says Michael Theesfeld, a trader for HPR Commodities. He says a number of factors are to blame -- from lower inventories, to a weak U.S. dollar, to escalating tensions in the Middle East. "There is a lot of speculative interest in the market and there's a lot of uncertainty in the market, and I think that will continue to make crude oil go higher, at least stay at these levels, and I don't think $100 is out of the question."
Mexico's decision over the weekend to reduce oil production because of stormy weather, and recent attacks on oil rigs in Nigeria are also cited as reasons for the artificially high prices.
"That means oil prices are $20, perhaps higher, than they would be if we didn't have these problems going on in the Middle East and Nigeria," says Addison Armstrong, a procurement analyst for Tradition Energy.
While a weaker U.S. dollar has made oil cheaper to buy in some countries, it has made it more expensive for American consumers. Market strategist Art Hogan at Jeffries and Co. says refineries are passing the higher costs to consumers and that includes the price of heating oil. "If they have to pay $90 to make your heating oil for you, they have to pass that cost also to you. And you're going to see the increase in price on a percentage basis."
Demand for oil is expected to be higher this year amid predictions that seasonably cold weather patterns [in the Northern Hemisphere] will return following last year's mild winter.