Price of oil briefly hits another record Tuesday

| 10/5/2004

The price of oil reached a record $50.99 during trading Tuesday, Oct. 5, on the New York Mercantile Exchange.

Media outlets and analysts attributed the increase to reduced U.S. output, a drop caused by damage to production facilities in the Gulf of Mexico in the wake of several hurricanes.

The price of crude oil closed above $50 a barrel for the first time Friday, Oct. 1. The price has been pushed up recently by a combination of factors – in addition to the hurricane activity – ranging from unrest in oil-producing Nigeria and increased demand from China to damage to oil facilities from insurgent attacks in Iraq.

Meanwhile, the federal government lent refiners 4.2 million barrels of oil from the nation’s Strategic Petroleum Reserve to make up for the drop in production caused by Hurricane Ivan. However, analysts doubted that the release would be enough to affect prices.

"It's certainly not going to make up for what we've lost in production," Tom Bentz of BNP Paribas Futures in New York told The Associated Press.

Diesel prices have followed oil into unknown territory, with the average price in every region of the United States exceeding $2 a gallon, the Department of Energy reported. The national average price was $2.053, with the highest price – as usual – in California, at $2.29 per gallon.