Crude Oil falls on global economy slowdown.

Crude Oil fell more than $1 a barrel on Aug 19, 2008, meanwhile a strengthening dollar curbed the appeal of commodities as a hedge against inflation.

The U.S. Dollar Index in New York, which tracks the currency against six others, rose to its highest since January 2008 on speculation U.S. consumer spending will keep the world's biggest economy out of a recession.

The oil price and the dollar have shown a long-term correlation whereby increases in one coincide with a drop in the other. People were buying commodities against risk in the dollar, war and the economy.

However, OPEC reported that the risks to the outlook for the world oil market appear to be on the downside; and the outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged and demand destruction.

In U.S., the car owners/drivers have turned to public transportation and shortened trips in response to high gasoline prices, a major factor in oil's drop of more than $31 a barrel since hitting a record over $147 per barrel last month July 11, 2008. The U.S. Department of Transportation reported this week Aug 14, 2008 that vehicle travel declined for the eighth month in a row.

Market has it that US crude prices may soon fall as low as $110 a barrel amid falling demand, but above $100 because the United States depends heavily on oil imports. In technical analysis, these level coincides with the 200-day moving average and the 3-month lows last seen in early May 2008

A look at the U.S. Commodity Futures Trading Commission shows that crude oil shorts positions from non-commercial investors, hedge funds and other large investors that don't actually take delivery of oil, surpasses those long positions in July 2208 for the first month since February 2007.

OPEC also reports that global oil consumption for this year 2008 will average 86.9 million barrels a day, and 87.8 million barrels a day in 2009. The slower rate of demand growth in 2009 is due to a major slowdown in transport and industrial fuel consumption not only North America but also Europe and parts of Asia.

It remains to be seen if after the Olympics are over, whether demand in the Far East is going to drop as some of the measures taken by the Chinese government to showcase their event are going to be over, and it might start to put a bottom on the oil prices.''

Even the occasional tropical storm fears near the Gulf of Mexico and the political unrest in the Georgia-Russia conflict have not may any significant impact on the oil price.

With this we know that oil price bias still favors the downside in near to mid-term. A quick note on gasoline price in the petrol kiosk in the street of Singapore are;

Shell Formula 98 $1.967
Shell Formula 95 $1.869
Shell Diesel $1.713