Crude oil traders joke that the price jump to $100 a barrel on Wednesday was like a teenager’s first kiss.

Only a single and tiny trade was made at that level on the floor of the Nymex, though prices touched a record of $100.09 on Thursday.

Whether the market enters a longer romance with the unprecedented price level, or dumps it after a short crush, hangs on a combination of fundamental factors and financial flows.

These include the weakness of the dollar and investors pouring fresh money into commodities as a hedge against inflation.

For many observers it is puzzling that oil should reach the $100 level on the very day investors were spooked by weak manufacturing data indicating that the world’s biggest economy and largest oil consumer could be heading into recession.

Julian Jessop, chief international economist at Capital Economics in London, says: “Given the clear deterioration in the outlook for demand, it is hard to escape the conclusion that oil prices are rising well above levels that can be explained by the usual economic fundamentals.”

But investors and big users of energy, such as airlines and utilities, are taking no chances. They are buying contracts that provide insurance in case prices remain high or surge higher in the months ahead.

The outstanding number of call options for December 2008 – contracts that give the right to buy at a predetermined price – at $100 a barrel has almost doubled since last summer to about 27,000 contracts. The price paid to buy such insurance has jumped to $6 a barrel, up from about $1 three months ago.

The outstanding number of call options for March 2008 at $100 a barrel – which protect against prices trading at that level until mid-February – have soared from less than 10,000 contracts in November to more than 25,000 contracts now.

Traders said groups such as airlines are buying large amounts of options at even higher prices on the over-the-counter market, suggesting risk managers fear prices could shoot higher.

Despite the increase in risk management activity, analysts are divided about the likely direction of prices and about the factors that have driven prices to $100 from about $75 a barrel in September.

Opec members have said speculators control the market, while the International Energy Agency, the western countries’ energy watchdog, has pointed to a tightening balance between supply and demand.

Nauman Barakat, senior vice-president at Macquarie Futures in New York, says the jump to $100 a barrel has little to do with supply and demand and “more with exogenous factors”.

He points out that financial investors have “poured at least $1.5bn and perhaps as much as much as $5bn of new money into commodities.”

Olivier Jackob, of Swiss-based oil consultancy Petromatrix, adds that Calpers, the biggest US pension fund, is aiming to put 1.5 per cent of its global portfolio into the S&P GSCI commodities index by March, meaning an additional $3.75bn fresh injection into commodities.

Other analysts point to pure fundamental factors.

In spite of a slowdown in US crude oil consumption, demand remains robust in China, India and the Middle East, while output increases outside Opec have been disappointing.

Opec has kept a tight lid on production to force a reduction in global oil inventories, and it refused to increase output at its meeting in December.

Paul Horsnell, head of commodities research at Barclays Capital in London, says financial flows and speculators respond to the flow of fundamental information.

“The pronounced and prolonged underlying tightening dynamic in global fundamental data remains the primary factor behind the strong upwards momentum in prices,” he says.

Giovanni Serio, of Goldman Sachs in London, says inventories have been declining dramatically and are close to critically low levels.

“US crude inventories have drawn to the lowest levels since 2003 for this part of the year,” Mr Serio says.

Amy Myers Jaffe, energy expert at the James A. Baker III Institute for Public Policy in Houston, says the push to $100 a barrel was caused by fear about future supplies, not demand. She notes that demand has started to slow in some areas.

Current projections indicate that demand in OECD countries for 2007 was down 0.3 per cent when in most years it rises, Ms Jaffe says.

On the supply side, a focus of concern is violence in Nigeria, where militants have launched attacks in the oil-producing region of the Niger Delta.

Last year militants forced a shutdown of as much as 750,000 barrels a day of output, or about a quarter of the country’s productions.

“Renewed violence around Nigeria’s main oil city of Port Harcourt provided prices with the necessary impetus to break through key resistance levels,” Mr Horsnell says.

Additional reporting by Sheila McNulty in Houston