Crude oil futures rose 62 cents yesterday closing at $107.68 on the New York Mercantile Exchange.
Brent crude, imported by most U.S. refineries to make gasoline, went up $1.91 to $124.57 a barrel.
The spike in Brent crude has been a major contributor to rising gas prices. Continuing a five-week rise, the national average is about $3.74 per gallon. The new national average is 37 cents per gallon higher than it was this time last month, and is well on its way to reaching $4 per gallon.
Analysts say the Iranian nuclear situation is a primary reason for the increased price of oil.
Last Friday Brent oil posted a monthly gain of 10.5% for February and reached $125.55, its highest intraday price since May 2. The boost was influenced by the growing tensions between the West and Iran over its nuclear program and the possible closure of the Strait of Hormuz.
A U.S. Government report released Wednesday said Western sanctions on Iran are already creating a problem in oil exports, and further restrictions could further tighten global oil markets.
Analysts suspect that if the situation should deteriorate annual averages could become $20 per barrel higher than current forecasts.
A stark decrease in demand has also lead to a surplus in crude oil inventories, causing price fluctuations.
The Energy Department said Wednesday inventories rose by 4.2 million barrels the week prior. Well above the expected increase of 1 million barrels. Overall demand for gasoline over the last four weeks has been 6.7 percent lower than this time last year. The weak demand is keeping oil prices at a stagnate $107 per barrel.
Oliver Jakob of Petromax said this is the worst U.S domestic demand for refined U.S. products in a single month since the December of 1996, with U.S. demand down 1 million barrels a day.
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