Oil Prices Dip as Dollar Climbs

I was just reading about how the dollar was gaining strength in the foreign exchange markets and mentioned how it would be great to see decreased oil prices as a byproduct of this appreciation. Well, here's the article to back up that optimism.

Oil prices fell 1.4 percent today as fresh gains in the dollar prompted profit-taking by speculative funds. Prices ended more than $3 below the all-time trading high of $57.60 set March 17. Last week's refinery blast in Texas stirred fears of a supply crunch for this summer. Additionally, speculative funds increased their long positions in the US crude oil market last week, making it hard for the price of oil to climb downward.

First, the blast only damaged a 'gas quality' unit but left plant operations/output unaffected. Second, the dollar's strength has led funds to liquidate their long positions and shift from the oil market to the currency market. Therefore, these last-week happenings seem promising this week for the price at the pump; at least in the short-run.

OPEC doesn't have any intentions of increasing oil production, noting that the markets are sufficiently supplied at the moment. An increase in production would further aid in the decrease in oil prices.

Let's all hope that both the currency and oil trends continue as we approach the 'sunny' season; a season that tends to bring with it higher gas consumption and foreign travel expenditures.