Oil settles above $78, sets new record

NEW YORK – Oil futures settled at a record high above $78 Tuesday on expectations that crude inventories fell last week and reports of new violence in Nigeria, a large oil producer and key supplier to the U.S.

Investors believe Wednesday’s inventory report by the Energy Department’s Energy Information Administration will show that refiners drew down oil inventories as they continued to increase gasoline production last week, analysts said.


News that a Nigerian construction worker was kidnapped Tuesday added to the bullish tone of a market that seemed determined to test last year’s record highs, analysts said.

“They want to get back to $78.40,” the intraday price record set July 14, 2006, said Jack Hunter, an energy trader at FC Stone Group in Kansas City.

Light, sweet crude for September delivery gained $1.38 to settle at $78.21 a barrel on the New York Mercantile Exchange. That puts futures within striking distance of the intraday record, and beat the settlement price record of $77.03 set the same day.

AP