U.S. crude oil futures soared more than $1 a barrel early Friday after a fuel barge caught fire and exploded near an oil storage terminal, briefly sparking terrorism fears.
The blast in the Arthur Kill waterway between Staten Island and New Jersey sent plumes of black smoke and flames into the sky and prices on the nearby New York Mercantile Exchange (NYMEX) soaring.
NYMEX April crude oil jumped to an intraday high of $35.95 a barrel, surging $1.21 a barrel.
By 1:15 p.m. EST, prices had eased back to $35.58 a barrel, still up 84 cents on the day, as law enforcement offieat alert, warning that energy facilities might be targeted.
Erroneous reports that the blast had hit an oil refinery also strengthened the initial gains. Prices fell back as it emerged that only an oil storage facility was affected.
Oil prices have been trading at their highest level for 29 months amid growing fears of war in Iraq, the world's eighth biggest oil exporter. An 11-week strike in Venezuela has further cut down U.S. winter fuel supplies.
Heating oil futures also surged on Friday, hitting a session high of $1.12 cents a gallon, a gain of nearly 5 percent on the day.