Yesterday, U.S. oil prices settled at $98.10 a barrel. This is an increase of 2.8% from the day before. A more important numerical barrier was reached, as U.S. Oil broke $100 a barrel during trading.
The increase in price can be attributed to the large amount of unrest in Libya, Bahrain, and other countries wherein protests are continuing with no end in sight. It is estimated that Libya has cut off around one-third of its daily oil output--a major revenue generator for the country.
Historically, Oil remained between $70 and $85 between September 2009 and November 2010, according to Wall Street Journal Market Data. However, with the recent crisis in Egypt, followed by a trickling effect in nearby countries, Oil is expected to spike in the near future.
Many can remember the high Oil prices in October 2008, when U.S. prices were so high, some people avoided driving altogether. In fact, this Tuesday was the first time that U.S. prices touched $100 a barrel since October 2008.
Some nations are attempting to help with their own Oil output in response to Libya's sharp decline in Oil exports. However, Libya's crude Oil is of a higher quality--so demand is still there for crude Oil, however supply is limited.
Commodity prices have been skyrocketing recently, with Cotton (great article on it here), Soybeans, and Cocoa all trading much higher than initially predicted. Now it appears that Oil can be added to that same list.
Let's just hope that these trading prices are only temporary and not long-term.