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Oil Prices Soar to New Record Above $75

Wednesday July 5, 2:23 pm ET
By Brad Foss, AP Business Writer

WASHINGTON (AP) -- Oil prices soared to a new record above $75 a barrel on Wednesday, propelled by a rally in gasoline and geopolitical tensions.

A glitch at a Texas refinery on Monday and recent shipping problems along the Gulf Coast following an oil spill have heightened the market's concern about motor-fuel supplies at a time when demand continues to rise in spite of rising prices. The start of a new fiscal quarter also brought more speculative money into the market, brokers said.

Light sweet crude for August delivery briefly surged to $75.40 a barrel on the New York Mercantile Exchange before easing back to $75.20, an increase of $1.27. Gasoline futures jumped by more than 6 cents to $2.284 a gallon. The last time front-month oil futures settled above $75 was on April 21. The previous intraday high, also set April 21, was $75.35.

Oil prices are now roughly 26 percent higher than a year ago, but still below all-time inflation-adjusted highs of around $90.

With global oil demand approaching 85 million barrels per day, traders are extremely nervous about the possibility of any supply disruptions, especially because there is less than 2 million barrels a day of spare production capacity, most of it in Saudi Arabia.

This is one of the reasons I think people should stay away from oil as an investment. It is way too reliant on politics and war, which are both very unsteady things in the world today. Investing in oil is highly speculative, risky, and volatile, not a good investing for long-term investors, in my opinion. Sure, people have made money by investing in oil, but past results don't mean anything for future results. All industries and commodities are affected by the news, but oil is especially dependent on it, which, again IMO, simply makes it a not-so-good investment for investors (For traders it might be a decent way to go).



David K
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