Dollar Gains Oil Falls

August 26, 2008 · By ProfitEdition News Filed Under Economy

The relationship between dollar and oil once again showed signs of their closeness. On Tuesday with $113 a barrel oil prices fell as as gains by the U.S. dollar against other major currencies pulled investors away. Noteworthy is the relationship between dollar and oil is that the medium of trade for oil is the dolar. As the dollar strengthened other causes for oil prices going down were the expected fall in European demand. There were also fears that Hurricane Gustav may disrupt oil operations in the Gulf of Mexico.

In terms of trading the delivery for crude October delivery rose by 52 cents. Closing at $115.11 for a barrel on the New York Mercantile Exchange.

It’s definitely a welcome change to see oil pricing going down after going through an abnormal high. What does the future hold? Will oil economy gurus who have been predicting oil prices touching $200 be right or will the other side win over?

The long term view is that oil prices will continue to rise. The demand for oil is on an increase as economies like India and China need oil for their industry needs. Combined with the focus on oil for energy needs of the world and high energy consumption first world countries. Till an alternative energy solution is sound oil is likely to rule. No economy whether US or Europe really seems serious about an alternate energy source besides fancy words in conferences. Oil rules till then.

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