Oil price down as dollar rebounds

BBC
Friday, August 22, 2008

The price of oil dropped more than a dollar on Friday, reversing earlier gains, as the dollar strengthened.

US sweet light crude shed $1.38 to $119.83 while London Brent crude dropped $1.35 to $118.81.

Investment in commodities tends to rise when the dollar is weak because they are seen as a safe alternative. The reverse happens as the dollar rises.

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Another factor pushing down prices is speculation that oil producer group Opec could increase supplies.

Geopolitical tensions – such as the missile shield deal agreed earlier in the week between Poland and the US – had fuelled concerns about oil supply, buoying prices.

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