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Oil futures top $100 a barrel

The record close came amid plentiful supplies and falling demand. No single reason was cited for the price jump.

NEW YORK - Oil futures shot higher yesterday, closing above $100 for the first time, as investors bet that crude prices would keep climbing despite evidence of plentiful supplies and falling demand. At the pump, gasoline prices rose further above $3 a gallon.

There was no single driver behind oil's sharp price jump. Investors seized on an explosion at a 67,000-barrel-a-day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria, and continuing tensions between the United States and Venezuela.

Light, sweet crude for March delivery rose $4.51 to settle at a record $100.01 a barrel on the New York Mercantile Exchange, after earlier rising to $100.10, a new trading record. It was the first time since Jan. 3 that oil had been above $100.

There was no overriding reason for such a price spike, but it could be a bad sign for consumers already bearing the burdens of high heating costs and falling real estate values. Many recent forecasts have said oil-demand growth this year would be less than initially expected, yet prices continue to rise. That suggests prices may continue rising as the weakening dollar attracts new investors to the futures market.

And rising oil prices mean higher gasoline prices.

"As the economy weakens, it's going to be met with $3.50 and $3.60 gasoline," said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm. "And that really spells trouble for the consumer."

Oil prices are still within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

At the pump, meanwhile, gasoline prices jumped 1.8 cents to a national average price of $3.032 a gallon yesterday, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, are following oil prices higher. The Energy Department and many analysts expect gasoline prices to peak this spring, well above last May's record of $3.227 a gallon.

Gasoline and heating-oil prices appeared to lead yesterday's wide advance in energy prices due to the explosion Monday at Alon USA Energy Inc.'s refinery in Big Spring, Texas, which could be shuttered for two months.

"The refinery fire in Texas is making people a little concerned," said Michael Lynch, president of Strategic Energy & Economic Research Inc., of Amherst, Mass.

March gasoline jumped 10.93 cents to settle at a record $2.6031 a gallon, and March heating oil rose 11.45 cents to settle at $2.7614 a gallon, also a record.

A threat by a rebel group in Nigeria to escalate attacks on the nation's crude-oil infrastructure helped boost oil prices. The rebels were acting in response to rumors that the government had killed a captured leader, who authorities later said was safe and well. Militants' attacks have cut about 20 percent of Nigeria's crude output in recent years.

Traders also are focused on the Organization of Petroleum Exporting Countries, which will meet early next month to map out production plans, and Venezuela, where President Hugo Chavez made conflicting statements over the weekend about the country's legal dispute with Exxon Mobil Corp.

OPEC could move to cut production in the second quarter, typically a period of low demand, though many analysts say that is unlikely. In Venezuela, Chavez said he was not serious about an earlier threat to cut oil sales to the United States, but also threatened to sue Exxon Mobil. The oil company is fighting Venezuela's nationalization of an oil project, and it recently persuaded several courts to freeze $12 billion in Venezuelan oil assets.

Other energy futures also rose yesterday. March natural gas jumped 31.7 cents to settle at $8.977 per 1,000 cubic feet.