A sharp decline in the US dollar following a weak report on US economic growth, has taken oil prices to a new high. New York's main contract, light sweet crude for delivery in April yo-yoed at US$102.60 per barrel. The fresh record prices coincide with the flow of investor money into commodities. The surge in crude oil futures has little to do with market fundamentals now. A price bubble is emerging, and the market faces a risk that crude oil pricing could also collapse as fast as it rose.
As per the US Commerce Department, the US economy expanded at a sluggish 0.6% annual pace in Q4, in a report that left its prior estimate of output growth unrevised. Additionally, concern that OPEC could reduce output has been one of the factors driving prices above 100 dollars this week.
29-Feb-08 
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