Oil hits record $100 a barrel; gas $4 a gallon this summer?

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Oil prices again surpassed $100 a barrel today, Jan. 3, after soaring to touch a record $100 a barrel Wednesday, Jan. 2, on escalating violence in Africa’s leading oil producer, a weaker U.S. dollar and a view that global demand for oil will outstrip supplies, the Associated Press reported.

The latest market mover was an inventory report showing a drop in U.S. crude supplies. In its weekly inventory report, the U.S. Energy Information Administration said crude stocks fell by 4 million barrels last week. Analysts were looking for a drop of 1.7 million barrels, according to a Dow Jones poll. It’s the seventh straight week crude inventories have fallen.

Oil and gasoline demand in the surging economies of China and India have sent prices soaring over the past year, and tensions in oil-producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices higher, the AP reported; in addition, several Mexican oil export ports have been closed due to rough weather.

Oil prices are 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.

Higher crude oil prices typically mean higher gasoline prices, and some analysts predict gas prices could rise as high as $3.50 to $4 a gallon this summer. EIA predicts gas prices will set a new record national average above $3.40 a gallon this spring. Gasoline hit a national average high of $3.21 a gallon on May 21.