Oil falls to six-week low of $127

OIL WATCH

Oil and other commodities may drop further and the dollar increase if the Federal Reserve boosts interest rates to curb inflation. Philadelphia Fed President Charles Plosser yesterday said rates should be raised. Hurricane Dolly is expected to make landfall near the Texas-Mexico border, away from U.S. oil fields.

Crude oil for September delivery fell $1.31, or 1 percent, to $127.11 a barrel at 9:17 a.m. on the New York Mercantile Exchange. Futures touched $125.35 a barrel on Wednesday, the lowest price for a contract closest to expiration since June 5. Oil is up 70 percent from a year ago.

The dollar rose to 107.69 yen as of 9:28 a.m. in New York, from 107.33 in New York yesterday. It appreciated to $1.5741 per euro, from $1.5783 yesterday.

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 29 percent in the first half of the year as the U.S. currency retreated 7.4 percent. The index has fallen 7.1 percent this month as the dollar has stabilized.

Dolly strengthened over the Gulf of Mexico, and may become a Category 2 hurricane before making landfall, the U.S. National Hurricane Center said on Wednesday 7 am central time.