Oil muscles past faltering U.S. economy

With oil over $100 despite a flagging U.S. economy, prices seem moved more by strength in global demand.

NEW YORK (CNNMoney.com) — There was a time when oil prices needed the backing of a strong U.S. economy to reach record levels, but oil prices hit all-time highs again Wednesday even as a recession looms.

Clearly, a strong economy is still necessary to keep oil prices high, but it seems the United States is no longer oil’s main driver.


“The really strong economy is on the other side of the world,” said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm.

When crude closed at over $100 a barrel Tuesday, traders were quick to point to the short-term problems that led to the nearly $14 rally over the last two weeks: The spat between Exxon Mobil and Venezuela’s Hugo Chavez, fears the Federal Reserve may cut interest rates again, sending the dollar lower, and talk of an OPEC production cut.

CNN