What's Moving the Oil Markets?

•Crude futures softened in early European trading Friday, reacting to a recovery in the US dollar amid concerns that Thursday's strong rally was overdone, sources said.

•"The spike in energy [on Thursday] brings up the question of whether this latest move is a dead cat bounce, or the start of something more meaningful, one that could perhaps vindicate bulls like Goldman Sachs, who predicted on Wednesday that we could see the old highs by some time this year," MF Global said in a report. "Our negative view of the market is based on our belief that yesterday's move was way overdone."

•"The market is responding to the dollar," a source said, referring to the strong intraday correlation that currently exists. The ICE Dollar Index was at 76.557, recovering about half of Thursday's 1% fall. "The direction of crude oil today should still be dependent on asset allocations and the dollar; and a key input to the global markets will the Bernanke speech later today in Jackson Hole," Petromatrix oil analysts said in a report. added.

Updated: August 22, 2008