Crude oil surged to a new records last week as the dollar weakened after the U.S. unemployment rate grew the most in two decades and Morgan Stanley said prices may reach $150 within a month. The dollar weakened against the euro after unemployment rose to 5.5%, signaling the Federal Reserve may be reluctant to increase interest rates. Oil also rose after an Israeli minister said an attack on Iran may be necessary.
A decline in oil prices earlier in the week came after Congress held hearings on possible energy price manipulation, and billionaire investor George Soros said an oil price ``bubble'' is working with fundamentals in the market that may lead to a recession. Prices rose Thursday after European Central Bank President Jean-Claude Trichet's comment that the bank may raise interest rates next month caused the dollar to fall against the euro.

Crude oil for July delivery rose to $138.54 a barrel Friday's increase was the biggest gain in dollar terms ever and the largest on a percentage basis since June 1996. Oil rose to an all-time high $139.12 a barrel during trading. Brent crude oil for July settlement rose to $137.69 a barrel, a record close, after reaching an all-time high of $138.12 a barrel. Oil has surged to records this year partly because investors have turned to commodities as a hedge against the falling dollar.
Gold jumped the most in six months after the U.S. jobless rate had the biggest gain in more than two decades, spurring a drop in the dollar. Gold futures for August delivery rose to $899 an ounce. That marks the biggest gain for a most- active contract since Nov. 23. Gold may climb to $930 and silver will rise above $18 by mid-July, Sandeep Rungta, a metals strategist at Proficient Commodities in Kolkata, India, said in a report.
Copper jumped the most in three weeks as the dollar weakened on a rise in U.S. unemployment, boosting demand for the metal as a store of value. Copper has gained 19% this year as the dollar fell to record lows, boosting demand for commodities priced in the currency. The metal also gained today as global stockpiles fell, helping to quell demand concerns, Barclays Capital analysts wrote in a report today. Inventories monitored by the London Metal Exchange dropped 950 metric tons, or 0.8%, to 122,550 tons, marking a 1.9% decline this week. Supplies tallied by the Shanghai Futures Exchange fell 13% to 38,829 tons last week. The price rose 0.5% in the past week, the first weekly rise since May 16, as the dollar weakened. On the London Metal Exchange, copper gained to $8,000 a ton. The metal touched a record $8,880 on April 17.

U.S. stocks fell the most in almost three months by the end of the week after the biggest jump in the unemployment rate since 1986 and a $8-a-barrel rise in oil prices heightened concern that the economy will sink into a recession.

General Electric Co. and JPMorgan Chase & Co. led the retreat after the Labor Department said the jobless rate increased to 5.5 percent in May, higher than every forecast in a Bloomberg News survey. Washington Mutual Inc. tumbled, sending the Standard & Poor's 500 Banks Index to the lowest level in 11 years, on renewed speculation consumer defaults will grow. J.C. Penney Co., General Motors Corp. and Continental Airlines Inc. dropped as Morgan Stanley predicted crude may climb to $150 within a month.
GE, which relies on economic growth to increase earnings at its businesses ranging from jet engines to locomotives and turbines for power plants, declined 90 cents to $30.16. Citigroup, which got about 39 percent of its 2007 revenue from its U.S. consumer business, lost $1 to $20.22.
Washington Mutual, the Seattle-based lender that has lost more than 80 percent of its market value in the past year, declined $1.21 to $7.40, the lowest since 1994. The S&P 500 Banks Index tumbled 5.2 percent, extending its 2008 retreat to 24 percent. The 24-member KBW Bank Index slid 4.6 percent to the lowest since March 2003.

That defense helped turn the tide for its stock, which closed the week down 9%, yet it failed to breathe new life into the financial sector, which was browbeaten by news Wachovia's (WB) board forced out the company's CEO, numerous arguments suggesting consumer loan defaults are due to rise, and a Wall Street Journal report that the SEC is investigating Dow component AIG (AIG) for its swaps accounting.

Strikingly, the market handled quite well the news on Thursday that Standard & Poor's cut its financial strength ratings for bond insurers Ambac Financial (ABK) and MBIA (MBI) to 'AA' from 'AAA'. In fact, the market rallied in the wake of that news, supported by the notion that it had already been accounted for in stock prices.

Separately, the May same-store sales reports from the retailers Thursday morning were also better than expected, led by Wal-Mart (WMT), which reported a 3.9% increase, excluding fuel, and provided an upbeat forecast for June sales.