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THE WALL STREET JOURNAL: Oil hits $108.75 as investors jump on bandwagon

March 12, 2008

NEW YORK — Crude-oil futures shot to another record high yesterday, as new buyers looked past mixed projections on petroleum demand to participate in the upward momentum of the past few weeks.

Light, sweet crude for April delivery settled 85 cents, or 0.8%, higher at $108.75 a barrel on the New York Mercantile Exchange, after jumping to a record intraday high of $109.72 a barrel overnight.

Nymex futures traded in a range of more than $3 throughout the session, as the factors that have fueled crude’s ascent this year were inconclusive yesterday. The dollar’s weakness has fueled much of oil’s recent run-up, as investment funds seek a hedge in hard assets. But yesterday the dollar strengthened after the Federal Reserve announced measures to add liquidity to financial markets in an attempt to soften the credit crunch.

The International Energy Agency yesterday slightly cut its projections for world oil demand this year, which it now sees at 87.5 million barrels a day, up 2% from 2007. The energy watchdog agency for the world’s most industrialized nations said high crude prices continue to chip away at oil consumption in the U.S. and other industrialized nations, but warned that there is unlikely to be much relief from current prices because of strong demand in China and other emerging markets.

Separately, the Energy Information Administration said that it expects a slowing economy and record high oil prices to hold U.S. oil demand growth to just 40,000 barrels a day in 2008, bringing daily consumption to 20.74 million barrels.

Data due out today are expected to show U.S. petroleum stockpiles grew last week, according to a Dow Jones Newswires survey of analysts. The report is expected to show that U.S. crude-oil stockpiles grew by 1.6 million barrels, gasoline stockpiles grew by 300,000 barrels and stocks of distillates, which include diesel fuel and heating oil, fell by two million barrels.

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