Hold on to your wallets.
Oil cruised to another record high Monday and gasoline prices rose to their highest levels since the summer driving season in California and the U.S., strongly influenced by a weak U.S. dollar and troubling events in many parts of the world, analysts said.
Crude oil for December delivery traded as high as a record $93.80 a barrel on the New York futures market before settling at an all-time closing high of $93.53, up $1.67.
Analysts said fundamentals weren't to blame.
"There is no shortage of oil. Demand is weak and it will continue to be weak," said Fadel Gheit, senior energy analyst at Oppenheimer & Co.
But oil is traded in dollars, and the U.S. currency has continued to sink against most other major currencies in recent weeks. A weak dollar makes oil even more attractive to investors because it makes the commodity cheaper in other currencies.
Traders also reacted to news that Mexico's state-owned oil company shut down about 20% of its daily crude oil production, or 600,000 barrels a day, because of stormy weather in the Gulf of Mexico. That came one week after rough seas were blamed in the deaths of more than 20 offshore oil workers there.
Escalating tensions between Turkey and Kurdish rebels on both sides of its border with Iraq were also cited, with as many as 100,000 Turkish troops massing for a possible incursion. Other analysts cited the threat of more unrest in Nigeria, where six workers at an Italian oil facility were kidnapped last week.
"Right now all of the bullish things are happening at the same time, but I think there will be a correction before we reach $100 a barrel. In the meantime, it is hard to find a reason for these guys to take profits," said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago.
Others aren't so sure.
"The oil market may be only one or two events away from $100-plus oil," said Daniel Yergin, chairman of Cambridge Energy Research Associates and author of "The Prize," a Pulitzer-winning history of the oil industry.
"Oil prices are becoming increasingly decoupled from the fundamentals of supply and demand," Yergin said at a conference Monday at Georgetown University in Washington. "With prices over $90 a barrel and strong anticipation of $100, the oil market is showing signs of high fever, stoked by fears of clashes in the Middle East and resulting disruptions of supply." The most likely cure for the fever, he said, would be an economic slowdown, which would dampen demand for oil.
