Oil falls below $72 as US dollar strengthens

Oil falls below $72 as 3-month rally stalls amid stronger US dollar

Pablo Gorondi, Associated Press Writer
On Monday June 15, 2009, 9:10 am EDT

Oil prices fell below $72 a barrel Monday, halting a three-month rally, as the dollar, which typically trades inversely to crude, was boosted by comments by Russia's finance minister.

Benchmark crude for July delivery was down 23 cents to $71.81 a barrel by mid-afternoon in Europe in electronic trading on the New York Mercantile Exchange. Earlier in the session, it traded as low as $70.71. On Friday, it fell 64 cents to settle at $72.04.

Oil prices have more than doubled since March partly on expectations that massive U.S. fiscal and monetary stimulus will hasten a decline of the dollar. Investors often buy crude and other commodities as a hedge against the risk of inflation posed by a weaker dollar.

The euro fell to $1.3880 on Monday from $1.4015 on Friday, while the British pound was down to $1.6423 from $1.6450, after Russian finance chief Alexei Kudrin said this weekend that the dollar's status as the world's main reserve currency was unlikely to change in the near term.

Traders are also wary that the recent price run-up isn't supported by improving supply and demand fundamentals.
"There's more talk in the market of expectations of a pullback in oil," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "It's rallied too much in too short a period of time."

"Oil is still very strong given the weak overall fundamentals," he said.

To read original article click here

Other articles of interest...

Stay the Course
The debate over economic policy has taken a predictable yet ominous turn:

IMF Chief: Worst of Global Crisis Not Yet Over
The worst of the global economic crisis is not yet over but there are signs that the world has started to crawl out of recession..

Obama Financial Reforms Outlined in Op-ed Piece
Senior Obama administration officials Monday said in a newspaper op-ed piece that a landmark financial regulation reform plan to be released this week…