Crude breaks $25 a barrel for the first time since Sept. 11

by The Associated Press

Crude oil futures climbed above $25 a barrel at the New York Mercantile Exchange March 18 for the first time since Sept. 11, as traders priced in expectations of tighter supplies later this year.

The April contract rose 60 cents to $25.11 a barrel. The rally came after the Organization of Petroleum Exporting Countries decided March 15 to leave its current production target of 21.7 million barrels in place through the end of June.

Heating oil and gasoline futures rallied even more as April gasoline ended at 83.36 cents a gallon, up 2.46 cents, while heating oil prices rose 1.72 cent to 66.48 cents a gallon.

Natural gas rose 22.9 cents to $3.305 per 1,000 cubic feet on Nymex.

Brent crude from the North Sea jumped 52 cents to $25.07 a barrel in London trading.

OPEC’s decision to keep its present production quota in place for at lease three months reflects a desire by OPEC countries to move prices higher, analysts said.

Although officials did not rule out hiking production later this year, the move raised concerns that supplies are on course to tighten just as the high-demand summer driving season rolls around, analysts said.

Oil demand took a hit from the slowing economy over the past year, especially after the Sept. 11 terrorist attacks on the U.S. But with the economy showing signs of a recovery, demand for oil products is expected to rebound, lifting prices, analysts said.

“We could see record demand this summer,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “We have all this pent-up demand for energy.”