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Oil’s Latest Record: $140.21

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Oil’s Latest Record: $140.21

Swooning Stocks, 
Weak Dollar Add 
To Crude’s Strength
June 28, 2008; Page B5

Crude-oil futures came within a cent of $143 and ended at a record, as the euro wrangled the dollar to a three-week low and U.S. equities fell.

Light, sweet crude for August delivery settled 57 cents, or 0.4%, higher at $140.21 a barrel on the New York Mercantile Exchange. This is the first-ever close above $140. The front-month contract also set an intraday high of $142.99 a barrel.

Phil Flynn of Alaron Trading says that investors are seeking a safe haven in commodities amid a weak economy. He explains why oil prices will likely keep surging.(June 27)

The trifecta of skyrocketing crude-oil prices, slumping stocks and a weaker U.S. dollar haunts global markets, with each market helping exaggerate movements in the other two. The euro traded at a three-week high of $1.5790 against the dollar Friday, while the Dow Jones Industrial Average had at one point fallen about 4% from Wednesday’s close.

“We’re just seeing this model being reinforced in which higher oil prices are associated with weakening in the dollar and a declining stock market,” said Jim Ritterbusch, president of trading-advisory firm Ritterbusch & Associates.

The European Central Bank is expected to raise interest rates at its meeting Thursday, which would likely strengthen the euro at the expense of the dollar. ECB President Jean-Claude Trichet told legislators Friday that the bank’s main refinancing interest rate may go up a quarter-point.

[Corn tops crude chart]

The dollar is often no more than a fallback reason for oil prices to rise, when there is no other obvious impetus, said Peter Van Cleve, president of brokerage T.W. Energy Consulting in Kansas City, Mo.

Mr. Van Cleve sees next week following a similar pattern to this one, with the market focusing on U.S. oil and product inventories for the first half, then likely returning attention to the dollar.

In other commodity markets:

CORN: Futures rose slightly ahead of a report from the Agriculture Department detailing this year’s acreage levels. Overnight Chicago Board of Trade July corn set a record of $7.65 a bushel. July corn settled one cent higher at $7.5475.

GOLD: A record in crude oil, worries about inflation and further U.S. dollar weakness led to fund buying of gold. Chart-based momentum carried the metal to a one-month high. July gold rose $16.20, or 1.8%, to $929.30 a troy ounce on the Comex division of the New York Mercantile Exchange.

CATTLE: The Canadian Food Inspection Agency said Friday that the case of mad-cow disease announced Monday came from a five-year-old Holstein cow from British Columbia. No part of the animal’s carcass entered the human food supply and no risk materials entered the animal-feed system, the agency said.

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