Oil Price Closes at Record High; U.S. Negotiating Details of SPR Loan

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he price of crude oil on the New York Mercantile Exchange rose to $48.85 a barrel on Friday, the highest-ever closing price, Bloomberg reported.

Meanwhile, two major oil companies and a small Louisiana refiner were negotiating with the Department of Energy to borrow crude oil from the Strategic Petroleum Reserve as production in the Gulf of Mexico struggled to recover from Hurricane Ivan, Reuters reported.

Analysts said the price rose because traders were concerned that the damage caused by Ivan would cause stockpiles to be insufficient when refineries boost production of heating oil, Bloomberg reported.

Oil output in the Gulf was down 28% from normal levels on Friday, according to the Minerals Management Service. Ivan hit the area responsible for a quarter of U.S. oil production last week, and the return of the storm forced the Louisiana Offshore Oil Port to close a day this week, Bloomberg said.

Friday's closing price was the highest close since futures began trading in 1983, but was still below the highest intraday price of $49.40 set on Aug. 20. Prices were up 73% from a year earlier.

The Department of Energy said Thursday it was set to approve SPR loans once the details were worked out with refineries. A government source told Reuters that one of the loans would be for 100,000 to 200,000 barrels, and the other for 1 million to 2 million barrels.