Oil exchange traded funds (ETFs) rose as oil prices soared to a new record of $89 a barrel today after Turkey’s parliament authorized an incursion into northern Iraq in search of Kurdish rebels. Traders are worried that any escalation in the conflict between the Kurds and Turkey could cut oil supplies from northern Iraq. However, Turkey’s government said conflict with Iraq isn’t guaranteed. The vote overshadowed a U.S. government report that crude oil and gasoline inventories overall rose more than expected last week, reports John Wilen for the Associated Press. This beats the previous high from yesterday when oil prices reached more than $87 per barrel.

The Energy Information Administration (EIA) also reported that gasoline supplies rose by 2.8 million barrels last week, which is nearly triple analysts’ expectations for a 1 million barrel increase. During today’s trading, light, sweet crude for November delivery rose to a record $89 per barrel, it has since retreated from that high, but markets aren’t closed yet.

Many analysts say speculative investing is the main factor behind higher oil prices. They suggest that traders interpret the differences between current and future oil contracts as signs that money continues to be dumped into oil futures. In return, those signals prompt new buying, which pushes prices even higher. Some of the oil-related ETFs that are benefiting from the increase in oil prices and their performance year-to-date include:

• iPath S&P GSCI Crude Oil Total Return Index ETN (OIL) – up 29.9%
• United States Oil Fund (USO) – up 29.8%
• Claymore MACROshares Oil Up Tradeable ETF (UCR) – up 22.6%
• PowerShares DB Oil (DBO) – up 13.5% for the last three months, having launched in January
• PowerShares DB Energy (DBE) – up 9.6% for the last three months, having launched in January

Tags: Energy, ETNs, Oil, USO