Oil Trades at Highest Level in Over a Year

In trading Wednesday, the price of crude oil reached its highest level in over a year, as cold winter weather propped up the price

, according to the Associated Press. Oil prices were also brought up by conflict among Federal Reserve policymakers who are debating whether to extend a program to strengthen the U.S. housing industry, the AP says.

The program, set to expire at the end of March, involves buying mortgage securities from Fannie Mae and Freddie Mac. When news surfaced that the program might be extended, oil prices skyrocketed about a quarter, the AP reports.

Benchmark crude broke a record high that was reached Oct. 9, 2008, landing at $83.18 a barrel on the New York Mercantile Exchange Wednesday, the news service reported.

The boost in oil prices may be an indicator that the same fate is in store for diesel and gasoline prices in the year ahead. Diesel began to go up at the end of December for the first time in eight weeks, starting off the New Year this week at $2.797. Alongside diesel, gasoline prices have been rising, jumping 5.8 cents to a national average of $2.665 Monday. This is almost a dollar above the average during the same week last year.

According to Tom Kloza,
publisher and chief oil analyst at OPIS, we can expect to see oil prices continue to break record highs between now and next week. In his online blog, "Speaking of oil," Kloza says investment money tends to flow into oil and refined products futures during the first period of a new year.

Kloza says he expects diesel to reach levels higher than those in 2009, with a forecast that retail prices will get as high as $2.90 a gallon this week.