Oil prices continue to climb, as they almost hit a new record of $106 a barrel. Most of that was in response to U.S. supplies being lower than expected.
Other related events were the recent decision by OPEC to keep oil output where it's at, and the ongoing political problems between Columbia and Venezuela.
"The primary factor causing the surge in oil prices is the surprising drawdown in crude inventories, which caused traders to really react quite dramatically," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
With most analysts thinking the oil inventory in the U.S. would continue to rise; something it's done for seven straight times, they instead found they had plunged by 3.1 million barrels.
On the other side of the equation, even with the drop, oil inventories in the U.S. are still at historical highs, something that needs to be kept in mind in the midst of the drop.
Oil eventually settled at $105.47 a barrel, after its record high of $105.97.
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At the pump, meanwhile, gas prices extended their own advance toward record levels. The national average price of a gallon of gas rose 0.7 cent overnight to $3.185, according to AAA and the Oil Price Information Service. Gas prices are following oil higher, and are expected to peak this spring well above last May's record of $3.227 a gallon.
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Oil Advances to Record $105.97 as Dollar Drops to All-Time Low
Crude oil rose to $105.97 a barrel, the third day this week New York prices have reached a record, as the U.S. dollar fell to its lowest ever against the euro.
Gold and copper also advanced to all-time highs as the sinking dollar made commodities priced in the U.S. currency cheaper. Oil closed at a record yesterday after U.S. crude inventories fell for the first time in eight weeks and OPEC refrained from raising production.
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Crude Oil Rises to Record $105.97 in New York on Dollar Decline
Crude oil rose to a record $105.97 a barrel in New York as the U.S. dollar fell to its lowest ever against the euro.
Energy and metals prices have surged over the past year as the dollar plunged, prompting investors to seek a hedge against inflation. The Organization of Petroleum Exporting Countries refused to increase production targets yesterday, saying the market has sufficient supply.
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