Dollar falls as oil prices rocket

17 March 2008

Unprecedented oil prices of over $111 (€71.28) a barrel have been reached as the US dollar continues to slump.

Last week, oil prices hit new record highs on almost a daily basis - news which is likely to affect those with home heating oil.

The US dollar hit an all-time low against the euro over the past seven days, as it struggles to cope with the credit crunch and the aftermath of the subprime crisis.

Economists have suggested that this is one reason why oil prices are continuing to rocket.

"Oil and other commodities have an intrinsic value to the extent that the US dollar depreciates; (oil) becomes relatively cheaper in terms of other currencies, such as the euro," David Moore, a commodity strategist with the Commonwealth Bank of Australia, told the BBC.

This should compensate for the effect of rising oil prices, Mr Moore said.

Meanwhile, the Organisation of Petroleum Exporting Countries has stood firm in its pledge not to alter output in the face of rising oil prices.

Click here to view home heating oil price trends.