ANOTHER DAY, ANOTHER DOLLAR                  

The plunging dollar helped to push crude oil to yet another all time high yesterday. The market's upward momentum continues to mystify given the  mounting evidence that the economy is slipping toward a recession.

Price action near $110 does seem a bit tentative though, which is characteristic of an aging rally and may suggest the current move is becoming exhausted. The Labor Department reported that consumer prices were held in check during February, posting and unchanged figure for its monthly index.

Participants will view that number sceptically though, considering the run that energy prices have had over the past month. Certainly seeing retail sales fall by.6% last month lowers the outlook for US oil consumption.

But so far the crude oil market has been able to push aside a weakening oil demand/rising US inventory situation, due to the precipitous decline in the dollar driving strong speculative flows of investment into oil.

However, unless the dollar makes a significant recovery, we suspect price corrections to be short lived. Another factor supposedly helping to underpin crude oil prices yesterday were forecasts for a decline in OPEC exports and reports that some Nigerian oil export cargoes scheduled for April, will be delayed until May.

Naturally, this focus on the dollar's decline as a catalyst for rising oil prices must bring about an awareness that structural monetary and fiscal policy adjustments will probably be required to reverse the situation.

On a positive note, the US may be the destination of choice for travelers this summer and that could go a long way offset the wariness of consumers in the US. 
                           
M. Fitzpatrick