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Fundamentals don’t support $105 oil

03/17/2008
An unexpected drop in US crude inventories made front-month crude jump $5 to a record closing of $104.52/bbl Mar. 5 on the New York Mercantile Exchange, although many of the industry’s biggest participants and closest observers reported no new changes in either supply or demand to justify that fly-up.Crude prices climbed to new heights in the next trading session, driven not by the ebb or flow of oil but by the flow of money from pension and hedge funds and speculators into energy commodities. The market hit a high of $106.54/bbl Mar. 7 before closing at $105.15/bbl, down 32¢ for the day yet up $3.21/bbl for the week, after the Labor Department reported 63,000 fewer US jobs dur...
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