Commodity Daily News

As the Dollar's Value Enters a Holding Pattern, the Price of Oil Follows Suit

After temporarily rebounding to over $90, the price of Crude Oil has settled back into its former position in the $80-90 range. From the sudden uncertainty and price flotation in the market yesterday, Crude Oil was bought up by those traders who were unsure about the currency market. Also helping to raise the price of Oil yesterday was a call from Libya to cut production levels in order to prop up world price levels for Light Sweet Crude. The decreasing demand for energy has Oil producers in a panic to control price movements. Production cuts are one possible solution, but recent price activity which has occurred counter to supply levels has some analysts skeptical of such an action's impact.

One thing for sure is that the upcoming economic recession is weighing heavily on the price of Crude Oil. As economies falter, demand for energy drops. This adds further downward pressure on the price of Oil. For the time being, Oil appears to be floating along with the value of the USD. As confidence in the dollar wavers, the price of Crude Oil mimics the USD's holding pattern as its value is inversely correlated with that of the greenback. Without a clear indication for the movement of the USD, the price of Crude Oil will also continue this price flotation