NEW YORK – The price of oil settled above $50 a barrel for the first time Friday amid concerns about tight supplies globally and hurricane-related production problems in the Gulf of Mexico.
On the New York Mercantile Exchange (search), crude for November delivery settled at a record $50.12 per barrel, up 48 cents. Adjusting for inflation, oil prices are roughly $30 below the peak set in 1981.
But the thin global supply cushion and the slow return of oil and natural gas production in the Gulf of Mexico, where Hurricane Ivan roared through two weeks ago, have kept energy markets on edge for weeks.
Ed Silliere, vice president of risk management at Energy Merchant in New York, said fears that terrorists might cause trouble in oil-producing nations such as Iraq and Saudi Arabia have added to market jitters. The low volume of trading may also have contributed to Friday's rally, analysts said.
The federal Minerals Management Service (search) said Friday that daily oil output in the Gulf of Mexico is 28.5 percent below normal at roughly 1.2 million barrels — the same level it was at a week ago.
"For the commercial economy, that hurts," said Tom Kloza, director of Oil Price Information Service of Lakewood, N.J.
The retail price of gasoline is $1.92 per gallon nationwide, up 33 cents from a year ago, after rising two weeks in a row.
With demand strong and the nation's supply of crude 4 percent below last year's level at 272.9 million barrels, according to Energy Department (search) data, some analysts believe oil prices are headed for $55 per barrel or higher. Others keep waiting for the months-long rally to end.
"These prices are awfully frothy right now," said Kloza, noting that oil prices typically reach a peak in early October and then begin to slide significantly.
In other Nymex trading, November heating oil rose 0.97 cent to $139.58 per gallon; November unleaded gasoline rose 2.46 cents to $1.3522 per gallon; and November natural gas rose 2.3 cents to $6.772 per 1,000 cubic feet.
In London, Brent crude futures for November rose 24 cents to settle at $46.62 per barrel on the International Petroleum Exchange (search).