Monday, August 30, 2010

Crude Oil Falls as Dollar Strengthens, Economic Outlook Remains a Concern

Crude oil fell for the first time in four days as slower than forecast growth in personal incomes heightened concern the economy is struggling to recover. Oil fell from the highest level in more than a week after the Commerce Department reported that incomes increased less than forecast and the savings rate dropped. The dollar strengthened against the euro, curbing the appeal of commodities as an alternative investment.

“You do have a lot of evidence that the economy is just stalling,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “Policy makers are all making a brave face and saying we’ve got plenty of tools available, but I’m starting to think they’re running out of tricks.” Crude for October delivery fell 69 cents, or 0.9 percent, to $74.48 a barrel at 9:20 a.m. on the New York Mercantile Exchange. Earlier, it touched $75.58. Futures have tumbled 5.7 percent this month, the first decline since May.

The dollar gained 0.4 percent against the euro. The U.S. currency traded at $1.2709 per euro, compared with $1.2763 on Aug. 27 in New York. Incomes rose 0.2 percent, according to the Commerce Department, less than the 0.3 percent median estimate of 66 economists surveyed by Bloomberg News.

Reporter Margot Habiby can be contacted at

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