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Crude Oil Gains Record $10 a Barrel

Friday was a very volatile day in financial markets as the oil price rebounded to gain over ten dollars a barrel while US stock prices plummeted following the report of a sharp rise in unemployment. VOA's Barry Wood reports.

Oil soared after an Israeli politician raised the specter of an Israeli military strike on Iran, the second largest OPEC oil producer. In New York crude oil rose eight percent, or $10.75, to a record over $138 a barrel. The rise followed a five percent gain on Thursday, bringing oil's two-day advance to a stunning $16.

Commodity analyst Edward Meir in Stamford, Connecticut describes the oil market as hysterical. He believes oil prices will eventually come down.

"I personally think we are close to some kind of intraday reversal, which means that we are going to spike to new highs and close at our lows," he said. "And that will be an indication perhaps of a technical market top. We haven't seen it yet."

Meir spoke on Bloomberg Television. Other analysts said oil prices advanced in large part because the dollar has again been weakening against the euro.

On Wall Street the Dow Jones Industrials lost 395 points, their biggest drop in 14 months and the eighth biggest fall ever. The Dow average closed at 12,210, a sharp three percent loss on the day.

The stock market decline began at the open when the Labor Department reported that the US jobless rate in May rose by .5 percent to 5.5 percent. It was the biggest monthly rise in the jobless rate in over 20 years.

President Bush, speaking in Washington, had an explanation for why the jobless rate rose sharply.

"This rise was caused in part by a surge of new young entrants into the job market, but it is clearly a sign that is consistent with slow economic growth," he said.

The US economy grew at a .9 percent annual rate in the first three months of the year. Since the year began over 330,000 Americans have lost their jobs. While technically not in recession, many analysts believe the economy has entered a period of decline.

American consumers are being hammered by rising fuel and food prices, a continuing credit squeeze, sluggish growth, a weak job market and declining home prices. The price of gasoline, a major expense for Americans, is up over 50 percent in the past year.