Commodity Daily News

Despite Cuts in Production, Oil Prices continue to Plummet.

World oil prices held steady in the face of Hurricane Gustav as its impact was less than expected. Despite a 95.8% cut to oil production and a 91.6% cut to natural gas production in the Gulf of Mexico, oil prices have continued their steady decline. A testament to OPEC's stance that oil supply was not as big a factor in pricing than geopolitics and a weakened US dollar. With a line of storms brewing farther out to sea, there is concern growing among traders. However, with the increasing strength of the US dollar and the recent decrease in demand, oil prices remain under a downward pressure.

Hovering at $109.07 per barrel, the price of crude oil has dropped only a fraction of a dollar since yesterday. The dollar's recovery will help continue the steady drop in oil prices. With Gustav out of the way, investors are shifting their focus back to the weakening demand for energy, and other commodities.