Oil prices sky rocket to $130 per barrel

Oil climbed to a life-time high above $130 a barrel on Wednesday, driven higher by a combination of long-term production worries and a near-term focus on tight fuel stocks. Crude inventories have risen for a fifth straight week. Stocks of refined products were also forecast to have increased slightly, but the market is concerned distillates, which include heating oil and gasoline, could run short. U.S. crude hit a peak of $130.47 before easing to $129.71 by 9:28 a.m. EDT, up 73 cents. Investors have been drawn in by a weak U.S. currency, which has made dollar-denominated commodities relatively cheap for holders of other currencies. The dollar slid to a one-month low against a basket of currencies on Wednesday as the euro was pushed higher by expectations of higher euro zone interest rates. OPEC Secretary General Abdullah al-Badri said the soft dollar was one of the factors that could keep pushing oil higher. The Organization of the Petroleum Exporting Countries has kept official policy unchanged, but its biggest producer Saudi Arabia has raised production and other members have overcome problems that had reduced supplies. Tanker tracker Petrologistics said on Wednesday OPEC's oil output in May had risen by 700,000 barrels per day compared with April. The perception available oil will struggle to keep up with demand for the foreseeable future has led to a series of bullish price forecasts from investment banks and influential investors. Oil has risen from below $20 in early 2002.

This could be compared to the oil crisis of 1973. The 1973 oil crisis began on October 17, 1973, when the members of Organization of Arab Petroleum Exporting Countries announced, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria and Egypt, which were the United States, its allies in Western Europe, and Japan. In the U.S., drivers of vehicles with license plates having an odd number as the last digit or a vanity license plate were allowed to purchase gasoline for their cars only on odd-numbered days of the month, while drivers of vehicles with even-numbered license plates were allowed to purchase fuel only on even-numbered days. It caused a panic in the United States and many gas stations shut down and were abandoned.