The price of oil hit $100 per barrel for the first time Wednesday, the first trading day of the new year.
The belief that global demand for oil and its byproducts will continue to outpace supply fueled the rally that briefly took prices to the historic high.
Although industry experts have refused to raise output, adverse weather conditions as well as violence in some oil-producing countries were enough of an impetus to vault oil to the record-setting price.
Light, sweet crude jumped $4.02 to $100 a barrel for January delivery on the New York Mercantile Exchange before easing a bit. By early afternoon, prices were teetering in the $99 range.
Several Mexican oil export ports were closed due to rough weather. And, unrest in Nigeria, a major oil producer, also spooked concerns about supply.
On Tuesday, bands of armed men invaded Nigeria's Port Harcourt, the center of the oil industry. At least 12 people were killed, including four police officers and three civilians.
"Although the violence has not impacted oil flow out of the country, it has reignited supply concerns as militant attacks have reduced Nigeria's crude output by roughly 20 percent since 2006," said John Gerdes, an analyst at SunTrust Robinson Humphrey.
Further fueling the rally was a report that OPEC may not be able to meet its share of global oil demand by 2024.
For months, crude prices have been teasing investors with the $100 zenith only to slip back a bit. That it reached the threshold in the first trading day of the year – when volume is only about 50 percent of normal – suggests the run-up is somewhat exaggerated.
Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, doubts whether prices would have risen as quickly on a normal trading day.
"I would imagine speculators are the biggest drivers today," Flynn said.
Speculators, who assume a high degree of risk in anticipation of gain, are suspected to be behind the swift rise in prices.
Consumers are feeling the brunt of the spike at the pump too. Gas prices were up 0.6 cent Wednesday to a national average of $3.049 a gallon, according to AAA and the Oil Price Information Service.
From NPR reports and The Associated Press
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