Oil Closes Modestly Lower

Crude oil closed slightly lower on Friday after again extending its record high. Light sweet crude for April delivery moved to $109.16, down 12 cents on the session. After starting lower, prices touched as high as $112.75, hitting a record high for an eighth straight day. Prices added $5.06 to last week's close, which was a record high.

Oil closed a choppy session higher on Thursday. Light sweet crude for April delivery moved to $110.33, up 41 cents on the session. Oil touched a record $111.00 at around 10:50 a.m. ET before coming back lower. Traders continued to consider the weekly inventory report from the Energy Information Administration from Wednesday that showed a much bigger than expected increase in crude oil inventories in the week ended March 7.

The report showed that crude oil inventories increased by 6.2 million barrels after showing an unexpected decrease in the previous week. The increase came in well above analyst estimates of an increase of about 1.6 million barrels. With the increase, crude oil inventories rose to 311.6 million barrels, although they remain in the middle of the average range for this time of year.

The greenback continued to slide, further enhancing gold's hedge value.

The dollar plunged to a new record low of 1.56750 versus the euro just after 10 am ET. The buck also hit a new 12-year low versus the yen, slipping to 99.60. Friday morning, JP Morgan Chase & Co. (JPM) said that in conjunction with the Federal Reserve Bank of New York, it has agreed to provide a secured loan facility to troubled investment bank Bear Stearns Companies, as necessary, for an initial period of up to 28 days.

In addition, JPMorgan said it was working closely with Bear Stearns on securing permanent financing or other alternatives for the company. On Friday morning, the Department of Labor released its closely watched report on consumer price inflation in the month of February, showing that prices unexpectedly came in unchanged compared to the previous month. The Labor Department said that its consumer price index was unchanged in February following an unrevised 0.4 percent increase in January.

Economists had been expecting consumer prices to increase by about 0.3 percent. The report also showed that the core consumer price index, which excludes food and energy prices, also came in unchanged following a 0.3 percent increase in the previous month. Core prices had been expected to increase by about 0.2 percent.
Also, the Reuters/University of Michigan Consumer Sentiment Index edged down to 70.5 in March from 70.8 in February. Still, consumer sentiment was better than analysts expected.




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