NYMEX crude oil prices fall to $65 on home sales drop, economic recovery doubts

NYMEX crude oil prices for Nov 2009 delivery fell to $65.89 per barrel , an 8-week low, as sales of existing homes unexpectedly slumped, raising concerns about the economic recovery. Oil futures (see live oil prices) declined after the National Association of Realtors said home purchases dropped 2.7% annually and the dollar climbed against the euro. Futures have ranged between $65 and $75 since July 31.

Concerns about the US housing market also sent the S&P 500 and Dow Jones lower. OPEC agreed at its Sept. 9 meeting to maintain production quotas at 24.845 million barrels a day. Crude oil futures have gained 48% this year on speculation fuel consumption may recover as economies emerge from the global recession and as a weakening dollar encourages investors to purchase commodities as an inflation hedge.

- What I have referred to recently as the "3 lines in the sand" ($70 oil, $1000 gold, 76 USDX) have been proving to be among the toughest challenges yet for the anti-dollar crowd, at least in the recent weeks. Oil prices have to sustain momentum above $70 and preferably $75, gold prices have to breach $1000 and test support successfully, and the USDX has to break convincingly below 76 for the dollar bears to have any traction at all in this market.

Just as I abhor vertical rises in the price of anything (even if it's gold or oil, or perhaps especially), in the same fashion, I am rather skeptical of vertical rises in the price of anything - check out that 90-degree bounce above 76 on the USDX. This might turn out to be a short-term thing - unless oil's support is broken around the 200-dma level which currently stands at $56.57.

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