NYMEX crude oil falls to $118 as slowing economy dampens demand

NYMEX crude oil fell for a third day, trading near $118 per barrel on concern slowing economic growth in the US and Europe will curb fuel consumption. Crude oil for September 2008 delivery fell to $118.00 yesterday [5 Aug 2008], the lowest since 5 May 2008 on the New York Mercantile Exchange [NYMEX]. Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted US consumers to limit spending. The Federal Reserve left interest rates unchanged at 2% yesterday amid weak economic growth.

- By some accounts, the US economy has already been slowing down since way back in 2006 or 2007 so that's not it. And for the past 3-4 months, the US Dollar Index [USDX] has been bouncing between 72 and 74, while oil prices have setting records back then. The Fed funds rate has remained at 2.00% since 30 Apr 2008 so that's not it, either.

So I will still tend to lean towards the Big Beijing Olympics Shutdown as one of the main reasons for the recent phenomenon of crude oil and many other commodities falling off the cliff, and I know I'm not the only one saying this. The 2008 Olympics are from 8-24 Aug so we've got a month or so to see if this thesis proves to be correct - or not.

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