Oil prices spiked to a new trading high Tuesday, sweeping toward $130 a barrel as supply concerns intensified the momentum buying that has lifted crude deeper into record territory.
The June contract for light, sweet crude traded as high as $129.58 on the New York Mercantile Exchange before settling back to $129.12, up $2.07. The imminent expiration of the June contract created additional volatility in the market, and raised the very real possibility that crude could hit $130 before the end of the day, when the contract was ending.
Oil's trek toward $130 coincided with the Labor Department's report of an unexpectedly sharp rise in wholesale inflation last month. The combination raised fears that inflation will slice into Americans' discretionary spending, and that sent stocks falling sharply on Wall Street.
Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill., said prices were being supported by strong demand for diesel fuel in Asia, and a weakening of the U.S. dollar against the euro, which makes oil cheaper for some investors overseas.
"We're getting a combination of two price drivers this morning," he said.
Oil prices are now about twice as high as they were just a year ago. Prices have been propelled by a number of factors, including supply concerns, soaring global demand and a sliding dollar.
This latest surge comes after OPEC's president was quoted as saying his organization won't increase its output before its next meeting in September, adding to lingering worries about global supply.
The June contract for light, sweet crude traded as high as $129.58 on the New York Mercantile Exchange before settling back to $129.12, up $2.07. The imminent expiration of the June contract created additional volatility in the market, and raised the very real possibility that crude could hit $130 before the end of the day, when the contract was ending.
Oil's trek toward $130 coincided with the Labor Department's report of an unexpectedly sharp rise in wholesale inflation last month. The combination raised fears that inflation will slice into Americans' discretionary spending, and that sent stocks falling sharply on Wall Street.
Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill., said prices were being supported by strong demand for diesel fuel in Asia, and a weakening of the U.S. dollar against the euro, which makes oil cheaper for some investors overseas.
"We're getting a combination of two price drivers this morning," he said.
Oil prices are now about twice as high as they were just a year ago. Prices have been propelled by a number of factors, including supply concerns, soaring global demand and a sliding dollar.
This latest surge comes after OPEC's president was quoted as saying his organization won't increase its output before its next meeting in September, adding to lingering worries about global supply.
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