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Oil prices fall on dollar rises Oil below $100 on economy fears
(about 5 hours later)
Oil prices have fallen to just above $100 a barrel, as the dollar's recent slight recovery has helped calm investor enthusiasm for crude. Crude oil prices have fallen below $100 a barrel on concerns about demand for oil after weak US economic data.
In early Tuesday trading, the benchmark US light crude had fallen 57 cents to $100.29, as it continues to pull back from last week's $111 record high. The main contract for US light crude had fallen 98 cents to $99.93 a barrel in US trading, as it continued to pull back from last week's $111 record high.
Saudi Arabia's announcement that it plans to increase oil output has also helped calm global prices. US consumer confidence fell to a five-year low and house prices suffered their biggest fall in 21 years.
The modest dollar gains have also helped gold prices fall back. Analysts said fears of a severe economic downturn in the US could keep oil below $100 in the short term.
Continuing dollar fears "The question is how bad the US economy is going to be, " said Tony Nunan, a risk management executive at Tokyo-based Mitsubishi.
In Tuesday morning trading in Europe, one euro was worth $1.5532, compared with last week's record high of $1.5904. Modest strength in the dollar and Saudi Arabia's announcement that it plans to increase oil output has also helped to calm investor enthusiasm for crude.
In this situation it's possible we'll see renewed vulnerability of the US dollar at some point David Moore, Commonwealth Bank of Australia Yet analysts cautioned that expected further interest rate cuts from the Federal Reserve, the US central bank, could see the dollar weaken again and oil prices rise as a result.
Meanwhile, one pound was at $1.992, also down from last week's highs.
Yet analysts cautioned that expected further interest rate cuts from the Federal Reserve, the US central bank, could see the dollar fall back again, as oil prices rise as a result.
"It's quite possible for the conditions that have pushed oil prices higher to be re-established," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney."It's quite possible for the conditions that have pushed oil prices higher to be re-established," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.
"US interest rates are low and they will be cut further. "US interest rates are low and they will be cut further."
"In this situation it's possible we'll see renewed vulnerability of the US dollar at some point." Gold was trading at $926 per ounce, well below the all-time peak of $1,033.90 seen earlier this month.
Gold was trading at $930 per ounce, well below the all-time peak of $1,033.90 seen earlier this month.