Crude Price Falls Sharply
NEW YORK (AP) — Crude futures have dropped sharply Monday, pulling back from record levels as investors fear that the financial crisis that forced the sale of Bear Stearns is a sign of deeper economic trouble.
Oil’s steep decline comes hours after futures rose to a new trading high near $112 a barrel on the Federal Reserve’s surprise Sunday move to lower a key interest rate by a quarter point. In the past several months, Fed rate cuts have fueled rallies in oil prices.
Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Interest rate cuts, and even the prospect of future cuts, tend to weaken the dollar further.
Light, sweet crude for April delivery fell $3.08 to $107.13 a barrel in morning trading on the New York Mercantile Exchange. Overnight, prices rose as high as $111.80 before plunging as low as $105.11 in early morning Nymex trading.
