Benchmark crude for May delivery rose $1.75 to settle at $86.62 a barrel on the New York Mercantile Exchange (NYMEX) Monday. That followed gains of $1.11 a barrel on Thursday and $1.39 a barrel last Wednesday.
In all, prices are up over 5% since last week and over 70% since April 2009. And right now oil is trading at its highest level since Oct. 8, 2008, when crude settled at $88.95.
With so much momentum in crude markets, Addison Armstrong, director of market research at Tradition Energy believes "there's very little to prevent us from moving to $90 and above."
Other analysts corroborate that claim. Barclays PLC (NYSE ADR: BCS) analysts expect oil prices to "flirt with $100 this year" and then average $140 by 2015. And Morgan Stanley (NYSE: MS) analyst Hussein Allidina said in a Jan. 25 research note that prices will reach $95 a barrel by the end of the year, and average $100 a barrel in 2011.
"It's safe to say that we'll see triple-digit oil prices by the fourth quarter of this year," Jeff Rubin, the former CIBC World Markets Inc. chief economist who accurately predicted oil's surge during the last decade, said in an interview with Bloomberg News. "When we get into 2011 or 2012 and we start to deal with prices of $120 a barrel, $147 a barrel, $160 a barrel, that's where I think at least the global economy becomes very challenged."
Oil prices reached a record-high $147 a barrel in July 2008, and gasoline prices followed suit, topping out at $4.11 per gallon and helping to push the country into the worst recession in decades.
We could be in for a repeat this year, since the strength of the global recovery has exceeded expectations. The U.S. economy expanded by 5.6% in the fourth quarter and news that employers added 162,000 jobs in March was a big reason for oil's recent rally.
Meanwhile China, whose gross domestic product grew by 10.7% year-over-year in the fourth quarter and 8.7% for the full year, continues to see a huge jump in demand. China's oil demand grew by 28% last month - an increase that the International Energy Agency described as "astonishing."
"Crude oil surged past our pivot range to trade in unknown territory," says a report out today by The Schork Group, "above here the sky's the limit."
Light, sweet crude for May delivery today (Tuesday) rose 22 cents to settle at $86.84 a barrel. Earlier prices touched a new 18-month high of $87.09 a barrel.
The average nationwide retail price for gasoline hit $2.828 per gallon Monday, according to AAA, Wright Express and Oil Price Information Service. The price has risen 5.2 cents in the past month and now is 78.8 cents higher than a year ago.
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