Oil prices broke above $100 a barrel for the first time on Thursday after a U.S. government report showed a steep slide in crude inventories in the world's biggest energy consumer.
The surge in oil prices into the triple digits has darkened the economic outlook in the United States, already battered by a housing crisis and credit crunch, and could threaten growth in big European energy consuming nations.
Oil prices have been increasing significantly. Now if this high level of prices is maintained then it will have an impact on the economy, European Commission spokeswoman Amelia Torres told a news briefing.
U.S. crude climbed 47 cents to $100.09 a barrel by 11:57 a.m. EST, breaking Wednesday's record high of $100 even. Brent crude rose 45 cents to $98.29 a barrel.
The price of crude is up more than 71 percent from the same time a year ago, bolstered by thinning inventory levels, soaring demand from China and other developing countries, a weak U.S. dollar, and geopolitical turmoil.
Thursday's gains came after the U.S. Energy Information Administration reported that commercial crude stockpiles fell 4.0 million barrels last week to the lowest level since January 2005.
Crude stocks in the United States have dropped more than 25 million barrels, or nearly 8 percent, since early November as import flows slowed down and shipments were hindered by foul weather on the Gulf Coast.
Better-than-expected refinery utilization and a modest gain for imports helped drive a larger draw in crude against expectations, said Chris Jarvis, senior analyst at Caprock Risk Management in New Hampshire.
Adding support, Mexico's main oil export ports remained shut Thursday after foul weather hit earlier in the week. Mexico is a top-three supplier of oil to the United States.
Thursday's gains added to a near 4 percent gain on Wednesday that was triggered by violence in Nigeria's main oil port city, further threatening supplies from the world's eighth largest crude exporter.
Frequent attacks by militant groups since February 2006 have driven thousands of foreign oil workers from the oil-rich Niger Delta and cut oil exports by about 20 percent.
Oil, which rose by 57 percent in 2007, has scope to push even higher in 2008 along with other commodities, analysts said.
Gold and platinum also hit record highs on Thursday, bolstered by the weakness of the U.S. dollar that has made dollar-denominated assets relatively cheap.
Despite oil rocketing to $100, the White House said it will not open up the nation's emergency crude reserves to ease prices. The Paris-based International Energy Agency (IEA) also said it would not coordinate a release of emergency crude stocks from its 27 member states.
We are not going to carry out (an emergency) oil stock release, William Ramsay, the IEA's deputy head, told Reuters. We don't respond to prices, and we don't see any disruption in the physical oil market.
Officials from the Organization of the Petroleum Exporting Countries, which decided at its last meeting in December to maintain output restrictions, said the group could do little to halt the rally.