Posted on 08/08/2008 12:34:12 PM PDT by LdSentinal
NEW YORK (CNNMoney.com) -- Oil prices tumbled a 3-month low near $115 a barrel 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 settled down $4.82 to $115.20 on the New York Mercantile Exchange. It was the lowest close since May 1, when oil finished at $112.52.
Crude reversed course after settling higher Thursday, as the dollar hit a 5-month high against the euro.
The 15-nation euro bought $1.5017, down 2% from Thursday's levels. The British pound fell 1.4% to a 17-month low of $1.9164, and the dollar rose 0.8% against the Japanese currency to ¥110.275.
Oil is traded in dollars, and investors had been using it and other commodities to hedge against inflation. But as the dollar began to rebound, investors shifted their money to other investments such as stocks and bonds.
Investor fears about the deterioration in the European economy contributed to the dollar's rebound. Poor economic reports from the 15-nation euro zone on Friday followed a decision by the European Central Bank a day earlier to hold a key interest rate steady in order to keep cash flowing to the financial industry.
"So much of the buying we saw since last August when oil was trading at $68 a barrel was predicated on a weak dollar," said Peter Beutel, an oil analyst with Cameron Hanover Oil. "As the dollar is gaining now, we're seeing an unwinding of those positions in oil."
"There's no reason why we can't see an unwinding of positions back to the $68 to $79 level," said Beutel. "This market can always go further and faster than anyone will believe."
Oil has fallen more than $32, or nearly 22%, from the record high of $147.27 set July 11.
(Excerpt) Read more at money.cnn.com ...
But a worldwide recession would kill demand.
Georgia is not an oil exporter, and Russias oil export infrastructure is far removed from the Georgian area.
Why? I’ve been telling people for a long time the run up in oil is NOTHING but speculative bubble has nothing to do with market fundamentals. Market fundamentals put oil at about $45 a bbl.. everything over that is simply greed tax.
Now that the bubble appears to be bursting, you won’t see the nonsense you have been seeing where any news no matter how relevant shoves the price up dollars at a time.
You are correct. It is a speculative bubble and we can only hope lots of speculators are thoroughly burned in it.
Down 22% means a bear market in oil. Expect further slides.
Anyone here think the strength of the dollar is inversely proportional to Obama’s poll numbers?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.