The nation's biggest oil spill off Alaska helped push the price of crude oil to its highest point in 19 months as energy futures prices rose sharply in a bullish market.
"A market that was already poised to trade up a little was set on fire," said Madison Galbraith, senior energy specialist with Merrill Lynch Energy Futures.
The price of the May contract for West Texas Intermediate oil, the benchmark U.S. crude, rose 38 cents a barrel to close at $20.53 in New York Mercantile Exchange trading. Prices for subsequent months also rose sharply.
It was the highest nearmonth closing price for the key grade since Aug. 14, 1987, when it closed at $20.57.
Open market prices for the Texas crude rose 40 cents to close at $20.55 a barrel.
Open market prices for Alaska North Slope crude, delivered to Gulf of Mexico refineries, soared 95 cents a barrel to close at $19.40.
The price surge was sparked by the oil spill off the port of Valdez, where an Exxon Corp. tanker ran aground, spilling an estimated 240,000 barrels of crude oil into Prince William Sound.
The accident forced the closing of the port, the southern terminus of the transAlaska pipeline, which carries all crude oil from the North Slope.
The shutdown temporarily cut U.S. crude supplies by a quarter, and that incited the heavy buying of energy futures.
"The market's reaction was a little overdone" despite the interruption in North Slope supplies, Galbraith said. He said the shutdown was only expected to last a few days, but that traders were looking for an excuse to take prices higher.
Jim Fiedler, a market analyst with E.D.&F. Man International Futures Inc., agreed that prices advanced "because the market wants to go up."
He said prices rose at the outset of trading on the news of the tanker accident, but technical factors later took over and brought West Texas Intermediate to just under $21 a barrel.
Prices fell back to their closing levels as "some people took some profits on the anticipation of London (traders) not following through tomorrow," Fiedler said.
Trading was choppy late in the day, but "the market still looks very strong," Fiedler said.
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