Just yesterday, we reported that oil prices achieved a historic milestone, climbing above the $100 per barrel mark for the first time in history. However, it was revealed today that a lone broker seeking the fame of being the first to pay $100 per barrel caused the sudden price spike.
The broker purchased 1,000 barrels from a colleague — the minimum allowed — and then immediately sold most of it for a $600 loss.
“A local trader just spent about $600 in a trading loss to buy the right to tell his grandchildren he was the one who did it,” Stephen Schork, a former trader at Nymex and editor of the oil market Schork Report told the Financial Times. “Probably he is framing right now the print reflecting the trade.”
Despite the false fluctuation, crude oil prices are on the rise. In fact, oil prices have quadrupled since 2003.
The price hike is due to increased demand in the United States, China and other Asian and Middle Eastern countries. With emerging markets buying new cars in record numbers, the price of oil is only expected to rise.
Here in the U.S., the price of gasoline has actually lagged behind the rising cost of crude oil. According to the International Herald Tribune, the nationwide average for gasoline this week is $3.05, $.17 below the high set in May. However, analysts predict that the cost of gasoline could cross the $4 a gallon threshold by next spring. Goldman Sachs says the price of oil could reach $105 a barrel by the end of the year.
Oil’s historic inflation-adjusted high is $102 — in today’s dollars — reached in April of 1980.
