Oil prices plunged today on news of a strengthening dollar and weak demand.
NEW YORK (CNNMoney.com) -- Oil prices experienced the sharpest plunge in 17 years on Wednesday, driven down by weakening demand and a stronger dollar.Oil may have hit a peak. We shall see.
U.S. light crude for April delivery fell $4.94 a barrel to settle at $104.48 on the New York Mercantile Exchange.
The drop in oil was the largest single-day slide in dollar terms since Jan. 17, 1991, when oil fell by a third, or $10.56, after the United States launched an attack against Iraq to begin the first Gulf War.
In percentage terms, oil fell 4.51% on Wednesday - the biggest drop by that measure since August.
What I want to know is how declining interest rates (bigger money supply) lead to a strengthening of the dollar. Something doesn't add up.