Friday, August 8, 2008

Oil Down, Dollar and Dow Up

Crude oil prices dropped below $116 today, and should settle at about $4 down today. This along with a stronger dollar sparked about a 300-point rise in the Dow today.

Here is the Associated Press story filed minutes ago. In it, a trading firm president predict $3.50 a gallon gas by Labor Day, which would be more than a 35-cent drop from today's national price of #3.83. The AP reports that a stronger dollar against the Euro was the main catalyst:

With the dollar launching a massive rebound against the euro and yen after the European Central Bank and the Bank of England both left their benchmark interest rates unchanged, energy traders found reason to sell — especially since the ECB indicated that there probably wouldn't be any more rate hikes to come.

Also, gold is down to $877 an ounce.

This all says something about the strength of the U.S. economy. A good day like this was surprising given Russia's military action in Georgia, pipeline problems in Turkey, and a larger than expected loss from mortgage-finance giant Fannie Mae. There may be a light at the end of the tunnel for the country's financial woes yet.

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