Oil prices rise modestly as dollar falls - East Valley Tribune: Business

Oil prices rise modestly as dollar falls

Font Size:
Default font size
Larger font size

Posted: Wednesday, March 26, 2008 1:46 am | Updated: 9:47 pm, Fri Oct 7, 2011.

NEW YORK - Oil futures rose modestly Tuesday as investors focused on the dollar's latest decline rather than new worries about the economy. Gas and diesel prices, meanwhile, retreated further from their recent record levels.

The dollar's decline against the euro, which ended a greenback rally that began last week, attracted investors back to oil. The U.S. currency's protracted slide was a big contributor to oil's march to nearly $112 in recent weeks; many investors regard oil and other commodities as inflation hedges, and turn to such hard assets when the dollar is falling.

But oil's slight gain was far from definitive, and followed a session in which prices alternated frequently between gains and losses. Investors were rattled by the Conference Board's report that consumer confidence fell much more than expected this month. The drop in confidence intensified the oil market's concerns that consumers hesitant to spend would further weaken the economy and depress demand for fuel. Meanwhile, home prices as measured by the Standard & Poor's/Case-Shiller index fell by 11.4 percent in January.The reports raised new questions about the severity of the economic downturn.

Light, sweet crude for May delivery rose 36 cents to settle at $101.22 a barrel on the New York Mercantile Exchange.

"The crude oil market continues to chop," said Tim Evans, an analyst at Citigroup Inc.

Analysts and investors appear split on crude's future direction. Many analysts believe oil prices rose much higher in recent weeks than could be justified by supply and demand factors. Prices topped out at a trading record of $111.80 early last week, but have fallen about 10 percent since then.

Other analysts believe the falling dollar will continue to lure investors to the market, particularly given expectations that the Federal Reserve will cut interest rates several more times this year.Falling interest rates tend to weaken the dollar.Oil's recent decline has pulled gas and diesel prices down from a series of records set earlier this month.The average national price of a gallon of gas fell 0.5 cent overnight to $3.255 a gallon, according to AAA and the Oil Price Information Service.

  • Discuss

'EV Women in Business'

A PDF of the Tribune special section, featuring a mix of sponsored content from our loyal advertisers and newsroom coverage of the East Valley business community.

Your Az Jobs