Posted on 08/08/2008 8:09:36 AM PDT by kellynla
NEW YORK (CNNMoney.com) -- Oil prices tumbled Friday as the dollar rallied strongly against slumping foreign currencies and concerns about a Turkish supply disruption were eased.
Light, sweet crude for September delivery lost $4.03 to $115.99 a barrel in electronic trading on the New York Mercantile Exchange.
Crude reversed course after settling higher Thursday, following decisions by the European Central Bank and the Bank of England to hold key interest rates steady. ECB President Jean-Claude Trichet said the decision to keep rates at 4.25% came as inflation remains a concern, though the European economic growth outlook was gloomy.
"Looking ahead, based on the current prices for futures commodities, the ... annual inflation rate is likely to remain well above a level consistent" with the bank's goal "for quite some time," Trichet said.
That sent the dollar soaring against the euro, pound and yen, and oil prices sank. Like all dollar-traded commodities, oil prices tend to fall when the U.S. currency rises. A stronger dollar makes oil more expensive for foreign investors.
(Excerpt) Read more at money.cnn.com ...
Presently down $3.61
If by some miracle gas prices go below $3/gallon, you can count on people buying SUVs and big trucks again. lol
Won’t have to buy ‘em...just pull them out of the garage. LOL
Heh heh.
With FORD building econoboxes instead of F-150s and Expiditions, sheesh!
“buying SUVs and big trucks again”
I am way ahead, I own one of each. :)
Those of you who say it’s “real supply and demand” are invited to opine on whether worldwide oil demand has dropped 25% in the last three weeks.
So, when does this good news show up at the pump?
Prices and demand drop aren’t dollar for dollar in a speculative market.
On the way down: Oil goes down 20 percent, gasoline goes down 7 percent.
Excellent point.
You’ll save enough money to afford a tire gauge.
Already starting to show up here. Prices were as high as $4.05 - $4.15 a gallon. Yesterday, I saw some stations selling regular unleaded for $3.69 a gallon.
Look at the long term trend of the price before blaming the Market, speculators, or “big oil”.
The market couldn’t support that price so the price went down. Guess what the market works.
immediately, actually. Gas in my area has fallen to 3.60.
Everything over about $45 is greed tax, period.
Price elasticity is not a straight line. It depends on the price of the commodity at a particular time and the position where that price is located on an elasticity graph.
At a price above $4.00 per gallon the elasticity of demand is much greater than when it is $2.50 per gallon.
Part of what we are seeing here, as indicated by the article, is that some of the per barrel price in dollars shift is due to US Dollar re-strengthening.
Its rarely covered by the media that Oil per barrel prices have only doubled in the last six years to the Euro while in Dollars they had tripled.
A good part of the impact we have here is due to our currency devaluation and not do to the oil market at all.
When you have stupid economic policies and spending and taxing like we do, your currency becomes so much toilet paper.
Within a week or two.
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