Crude oil jumped $1.85 in early trading Monday to touch a record $107 per barrel as investors continued to pour funds into oil futures, Bloomberg News reported Monday.

Oil traded at the record price before pulling back slightly to $106.31 by midday Monday. Heating oil gained 1 cent to $2.96 per gallon, unleaded gasoline was unchanged at $2.69 per gallon.

With U.S. stocks expected to underperform historical averages due to sluggish U.S. profitable growth, and with global oil demand still strong, investors are increasing positions in oil, calculating that the world’s most vital commodity will outperform other asset classes in 2008. Oil is up about 75% during the past 12 months,

and has traded above $90 per barrel for most of 2008.

Further, the weak and falling U.S. dollar is plus boosting oil prices. considering oil is priced in dollars, whether the dollar falls, oil producers will try to increase the price of the product to preserve their purchasing potential. A lower dollar additionally implies higher U.S. inflation, prompting some investors to buy oil as an inflation hedge, further boosting the commodity’s price.

Continue reading Oil surges by $107 as analysts raise price forecasts; $110 is next hurdle

Original post by Joseph Lazzaro

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