WTI hits new record as EIA predicts declining inventories

Crude oil was higher again on Tuesday, reaching both in-session and closing highs on a weak dollar and more unrest in the Middle East.

In addition, the US Energy Information Administration raised its prediction of how much oil will cost next year from $73.50 per barrel to $79.72 per barrel and said that it believes crude oil inventories will decline both in the current quarter and in the first quarter of 2008.

West Texas Intermediate crude oil for December delivery added $2.72 to $96.70 per barrel on the New York Mercantile Exchange, a new record close, after trading as high as $97.10 per barrel earlier in the session, a new in-session high.

WTI has added 66 percent since the beginning of the year.

Among the news supporting oil prices during the day was word of an attack on a pipeline in Yemen which carries 155,000 barrels of crude oil per day, a bombing in Afghanistan that killed 64 people, and the evacuation of several North Sea oil platforms ahead of bad weather.

While Afghanistan itself does not produce a great deal of oil, added unrest there puts oil production in the region in question as analysts fear the expansion of the violence.

Nymex December gasoline added 5 cents on the session to $2.43 per gallon, while December heating oil gained 6 cents to $2.61 per gallon.

December natural gas, however, dropped 14 cents to $7.86 per million British thermal units.

AAA and the Oil Price Information Service said that at the pump prices for gasoline in the US were up 2 cents overnight to a national average of $3.034 per gallon, while separate sources at the EIA said the national average price for diesel fuel is at a new record of $3.303 per gallon.