CRUDE OIL FUTURES CRUDE OIL FUTURES

Dollars per barrel, five trading days WASHINGTON  Oil prices jumped to a record Thursday as a drooping dollar and inflation fears led investors into commodities. The price of a barrel of light, sweet crude for delivery in April rose $2.95, or 3%, to a record $102.59. The move came as the dollar continued to fall, hitting a new low against the euro at $1.5215. The dollar is at its lowest against a basket of major currencies since at least 1973, when exchange rates began floating, according to the Federal Reserve. Meanwhile, in his second day in a row of testimony on Capitol Hill, Fed Chairman Ben Bernanke continued to argue that he expects inflation to ease. Bernanke's comments came a few hours after the government said a key inflation gauge rose at a 4.1% annualized rate in the last three months of 2007, up from a 1.8% rate in the third quarter. He dismissed talk that the USA could be facing stagflation, which is marked by strong inflation and a stagnant economy. But he acknowledged rising prices for energy, food and other commodities were making the Fed's job of boosting the economy harder. A falling dollar tends to push up the price of oil largely because it makes imports more expensive. That, in turn, leads to heightened inflation expectations. Investors seeking a hedge put money into commodities such as oil. But that carries its own price, notes Darin Newsom at market analysis firm DTN. "These investors are trying to protect against the coming inflation that the lower dollar means … but by doing so, they are causing the inflation that they are most afraid of," he says. "Money is pouring into commodities." Bernanke, however, said oil prices are unlikely to rise in 2008 at the same 50% rate as in 2007. That would help lead to a moderation in price pressures. "The current inflation is due primarily to commodity prices, oil and energy and other prices that are being set in global markets," Bernanke told the Senate Banking Committee. "Those prices are likely to stabilize, or at least not to continue to rise at the (recent) pace." The Fed chief noted that policymakers in Washington may have less ability to respond to the economic slowdown than they did when recession last struck in 2001. Inflation is higher, making it harder for the Fed to cut interest rates out of fear that juicing up the economy will further spark price pressures. Seven years ago, the United States had years of projected federal budget surpluses. That gave Congress more room to cut taxes and enact other expansionary fiscal policies. Guidelines: You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. Read more