Nymex Crude Ends Above $100, Highest Ever Settlement

Crude oil futures settled over $100 for the first time Tuesday, as a potent combination of supply concerns gave traders the green light to push into record territory.

Light, sweet crude for March delivery settled up $4.51, or 4.7%, at $100.01 a barrel on the New York Mercantile Exchange. The March contract expires Wednesday. The April contract settled at $99.70. April Brent crude on the ICE futures exchange closed $3.24 higher at $98.15 a barrel.

The March contract hit $100.10 just before closing, topping the previous intraday record, set Jan. 3, by one cent. The settlement topped the previous record, set Jan. 2, of $99.62.

Futures surged early in the day on an explosion at Alon USA's (ALJ) Big Spring, Texas refinery that occurred Monday. Damage assessments indicated that the refinery would be out of commission for weeks or months.

A second boost came after Nigeria's Movement for the Emancipation of the Niger Delta promised renewed attacks on oil facilities if the country's government did not explain whether Henry Okah, said to be the group's leader, had been killed in a military hospital. Traders said reports that he may have been killed sent futures over $100 and into record territory.

The rally came amid conflicting signals however, with Nigerian authorities saying the militant leader was alive.

Lingering concerns that the Organization of Petroleum Exporting Countries might opt to curtain production at a March 5 meeting as well Venezuela's move last week to cut oil sales to Exxon Mobil Corp. (XOM) were also said to influence the gains.

"It's a stampeding herd of buffalo at this point," said Tim Evans, an analyst with Citigroup in New York.

Evans called the Alon explosion and Nigerian rebel threats "loud noises," with little ultimate importance to the overall supply-demand picture. The recent rally is therefore a "psychological phenomenon," he said.

The foray over $100 may be short-lived, some analysts said. The U.S. Energy Information Administration releases weekly U.S. crude inventory figures on Thursday, and is widely expected to show the sixth-straight increase in a row. That indicates that supplies are more than adequate, said Jim Ritterbusch, president of Galena, Ill.-based energy trading advisory firm Ritterbusch and Associates.

A Dow Jones survey of 10 analysts found an average predicted increase of 2.5 million barrels. Gasoline inventories are also seen growing, by 900,000 barrels.

"The EIA report forces the market to come before the judge," he said. "We still have a supply surplus of crude (in storage) against the five-year average."

Front-month March reformulated gasoline blendstock, or RBOB, settled at $2.6031 a gallon, up 10.93 cents or 4.4%.

March heating oil settled 11.45 cents higher, or 4.3%, at $2.7614 a gallon.

Copyright (c) 2008 Dow Jones & Company, Inc.