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COMMODITIES

Oil price breaks through $101 barrier

2 min

The price of crude oil hit $101.27 in New York on Wednesday before falling back below the $100 threshold. Yet rising revenues in oil-rich Venezuela haven't saved the country from food shortages. (Report: AFPTV).

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New York oil prices struck a record 101.27 dollars a barrel Wednesday on renewed global supply jitters.

Oil prices have jumped in the past couple of days amid the supply concerns. The latest price spike burst a prior record peak for New York oil prices of 100.40 dollars struck earlier Wednesday.

Prices have risen amid growing speculation that the Organization of the Petroleum Exporting Countries, which supplies about 40 percent of the world's oil, may cut output at a looming March 5 meeting in Vienna, Austria.

Analysts expect OPEC to cut its production in anticipation that world oil demand will fall as the northern hemisphere winter draws to a close and because of fears tied to slowing US economic growth.

The United States is the world's biggest oil consumer.

Prices, however, remained volatile and New York oil values retreated after striking the fresh record high.

New York's main oil futures contract, light sweet crude for March delivery, jumped to 101.27 dollars a barrel at 1913 GMT in volatile price action.

Traders said the market had also been unsettled over a legal spat between ExxonMobil, the giant US oil company, and Venezuela's government related to nationalized oil assets.

The spat has raised concerns about Venezuelan oil shipments to the United States, although industry analysts do not expect Venezuela to halt valuable oil exports to the energy-hungry United States.

"The run-up in oil is not about current supply but about the perceived threat to future supply. Whether it's OPEC greedily talking about cutting production or empty threats of Venezuela cutting off supply, it is obvious that this market is paranoid about less oil even in a slowing economy," said Phil Flynn, a market analyst at Alaron Trading.

Worries about fresh social unrest in Nigeria, Africa's biggest crude producer, have also supported the price gains.

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