Oil prices dipped below US$124 a barrel in Asia as demand concerns intensified and a statement that USA will leave interest rates untouched. Indication that more interest rate cuts are unlikely in USA, suggest inflation is too much of a concern to contemplate more rate hikes - pushing the dollar higher. Since last year, a series of Fed cuts designed to shore up the economy has led to a protracted decline in the dollar's value against the euro. That helped feed the record run-up in oil prices as investors bought commodities such as oil as a hedge against inflation. But when the dollar strengthens, the effect reverses.
Prices are now more than $11 below the trading record of $135.09 a barrel hit May 22. Oil prices are nearly twice what they were a year ago, and have definitely cut demand. Recent data indicates that high prices are slashing Americans' appetite for fuel.
04-Jun-08 
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