Oil tumbles to US$124 a barrel after Plosser hints at rate hike

NEW YORK, July 23, 2008 (AFP) – Oil prices tumbled Wednesday as supply concerns eased after a bigger-than-expected increase in gasoline reserves was reported in the United States. The threat to supply from Hurricane Dolly in the Gulf of Mexico diminished as the storm veered away from offshore oil installations.

New York’s main contract, light sweet crude for September delivery, dropped a hefty 3.98 dollars to close at 124.44 dollars a barrel.
In London, Brent North Sea crude for September delivery shed 4.26 dollars to settle at 125.29.

A rising dollar also helped push down crude prices.

Phil Flynn, analyst at Alaron Trading, said the market was influenced by recent comments from Philadelphia Federal Reserve president Charles Plosser, “who said US monetary policy is between a rock and a hard place and that an interest rate increase could come faster than expected,” Flynn said.

“Those comments hit the dollar and helped drive commodities lower,” he added.

Prices have tumbled by more than 23 dollars since striking record highs above 147 dollars on July 11. However, they remain at elevated levels after smashing through 100 dollars for the first time at the sta