Oil Prices Jump on Mideast Turmoil, Refinery Fires

Several events on Thursday caused the price of crude oil futures to rise, as Turkey attacked Syria and refinery fires in Texas and Russia helped oil to climbed by four percent over Wednesday.

In the Middle East, Turkey hit Syria with retaliatory strikes after parts of the southeastern part of Turkey were shelled yesterday.

The Turkish parliament also sent a message to Syria by approving further strikes if Syrian internal battles end up spilling over into Turkey again.

Concerns that things could escalate and oil supply disruptions could result are the main impetus behind the rise in prices. Shorts started covering their positions after the plunge in oil prices on Wednesday.

Oil Refinery Fires

As for the other events, the refinery of Exxon Mobil (XOM) in Baytown, Texas, which is the largest refinery operating in the U.S. at this time, caught on fire. It produces an average of 560,000 barrels a day.

In Russia, a refinery in Saratov, which produces about 130,000 barrels a day, also caught fire.

Oil settled at $91.71 a barrel, jumping $3.57, or 4 percent, on the New York Mercantile Exchange.

The national average for a gallon of regular gasoline rose to $3.784, up two-tenths of a cent from Wednesday, and 38 cents in comparison to a year ago, according to AAA.

Brent crude increased by $4.41, or 4.1 percent, to $112.58.

Natural gas was up a penny to $3.406 per 1,000 cubic feet.

Heating oil climbed 12.2 cents, or 4 percent, to $3.1884 a gallon.

Weakening Economy Continues to Drive Down Oil, Gas Prices

Weakening economic conditions continue to put downward pressure on oil prices, which in turn is also driving down the price of gasoline as consumers continue to tighten their wallets and spend only on necessities.

Oil for December delivery fell as low as $60.16 today, and ended up settling at $60.77 on the New York Mercantile Exchange. Brent Crude in London moved in step, falling by $4.44 to settle at $57.43 for December delivery.

Gasoline prices in the U.S. have continued to fall as well, with overnight averages coming in at $2.34 a gallon according to the AAA, and could fall to $2.00 a gallon by the end of 2008.

New Highs for Oil Again: In New York and London

Growing concerns over inflation has had investors flocking to commodities, which has been one of the reasons for the ongoing surge in prices.

With oil being denominated in U.S. dollars, it has helped those buying it up in other currencies as it continues to weaken.

Earlier in the day, crude oil prices for April rose to $111 in New York, a record high before pulling back to 109.65.

Brent Crude in London increased to $107.88, alson a new record, before it also pulled back to 106.72 a barrel.

For oil investors outside the U.S., the increasing fall of the dollar should help them gain some solid profits, and it won't end anytime soon, as the Fed is expected to cut interest rates even further; probably by 0.75 percentage points.

That will cause the dollar to weaken even further, and profits for many other currencies investing in oil to rise. With the fall of the U.S. dollar, you can of course even make money if oil were to stand still in price, and foreign currencies remain strong against it.