Prices began to retreat today as investors sold to lock into profits, but prices are expected to continue to push upwards into new territory in the days ahead, inching ever closer to $100 per barrel as speculators continue to drive the market.
The Times reports that crude oil futures briefly passed $90 a barrel - rising as high as $90.07 - twice in electronic trading overnight, despite a growing consensus among analysts that the oil's underlying supply and demand fundamentals do not support such high prices.
"This market has been hijacked by speculators," wrote Stephen Schork, a trader and analyst in Villanova, Pa., in a research note.
According to the Times:
Crude prices have jumped 28 percent since late August. The advance appears to be trickling down to consumers in the form of higher gas prices, and may result in higher heating prices this winter.After last night's run-up in price, light, sweet crude for November delivery fell 87 cents to settle at $88.60 on the New York Mercantile Exchange, the Times reports.
Prices at the pump have risen 5.3 cents over the past four days, averaging $2.81 a gallon on Friday, according to AAA and the Oil Price Information Service. Meanwhile, heating oil costs are expected to jump more than 20 percent this winter.
Overall, oil futures rose $4.91 this week, or 6 percent in a single week. Oil prices have risen from around $25 per barrel since 2002 to well over $80 per barrel in the past five years.
Despite venturing into record territory this year in nominal terms, the price of oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today, the Times reports.