Oil Climbs to $100 a Barrel

The price of crude oil hit a new high of $100 a barrel Wednesday. At midday, oil was up more than $3 at $99.25. Only one trade was recorded at the $100 level and the price quickly fell back a bit. Prices shot up this morning on renewed violence in Nigeria and weakness in the U.S. dollar.

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MELISSA BLOCK, host:

On the financial markets today, an inauspicious start to the new year. All of the major industries lost ground. The Dow Jones Industrials closing down 220 points. Analysts and traders are blaming a number of culprits: There were sobering data from the manufacturing sector, a weak showing by the dollar against the Euro, and the price of oil briefly hit $100 a barrel for the first time.

NPR's Jim Zarroli is in New York.

JIM ZARROLI: People who follow the oil business have been watching and waiting for oil to hit $100 dollars a barrel for weeks. It's kind of the way people wait for the temperature to dip below zero degrees in the winter. It's not like you want to see it happen, but there's always something little exciting about passing a milestone. Today, it finally happened. So why did oil break three digits, simply because it could. At least that's how Phil Flynn of Alaron Trading in Chicago sees it.

Mr. PHIL FLYNN (Vice President, Alaron Trading): I'm not going to tell you that there weren't full of stories out there driving the market today because there was, whether it was bad weather in the Gulf of Mexico, and concerns about Pakistan, of weather that ultimately, it got there on very light volume. So I think because so many traders were obsessed with the $100, that's why we got there.

ZARROLI: Here is how it happened. The New York Mercantile Exchange said right around noon today, two big trades came in - one for $99.90, one for a $100. Because a lot of people are still off for the holidays, trading was very light. So these trades had a much bigger impact on prices than they normally would have had, and a lot of oil industry analysts were idly speculating today that the people behind these trades simply wanted to be the ones who finally pushed oil over the big $100 mark.

Whether that's true or not - and there's really no way to know for sure - Flynn says it was only a matter of time before the milestone was passed. He says the economy is so strong around the world especially in places like China and India that demand for oil is soaring.

Mr. FLYNN: To find that the world economies are expanding and to find strong economic growth and the improvement of the standard of living to people all over the globe. So if you want a good part of the story or a happy part of the story, that's what it is.

ZARROLI: Of course, as Flynn knows, most Americans don't see what's happening to oil prices as a happy story. Take Ali Sha(ph), a limo driver, who was filling up his tank at a (unintelligible) station in Manhattan today where gas was selling for $3.53 a gallon. Sha says he drives about 300 miles a day.

Mr. ALI SHA (Limo Driver): Before, I would put about $25 to $30 and I'll be good for the whole day. And now, I think it's about - it has doubled more than that, you know.

ZARROLI: So what do you think of $100 a barrel of oil?

Mr. SHA: All I like to do is just sit home, hold my head and be, like, what's going to happen tomorrow. That's about it.

ZARROLI: With prices shooting up again today, the White House was once again asked whether it was time to tap into the Strategic Petroleum Reserve, and once again, the administration said, no way. A spokeswoman noted that oil is now at $100 a barrel because of a tight supply-and-demand environment. And she said, the way to address that is more investment and production.

Jim Zarroli, NPR News, New York.

BLOCK: And there's more about who wins and who loses when oil hits $100 a barrel. That's at our Web site, npr.org.

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