Why Oil prices are Zooming

Posted by Steven Mufson - WP

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Fears of inflation and large U.S. budget deficits drove the dollar on Wednesday to its weakest level since August 2008 and helped push oil prices to their highest in more than a year.

The euro rose above $1.50, while crude oil prices climbed over $81 a barrel in trading on the New York Mercantile Exchange.

Analysts said that investors and traders are worried that the Federal Reserve, fearing another dip in the economy, will hold interest rates low for too long and fuel a bout of inflation. And investors also fear that the Obama administration will be unable to rein in trillions of dollars of deficit spending used to revive the economy.

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