A Katrina level hurricane can destroy the US dollar in a day or two

The Oct NYMEX crude oil put in a lower low ($113.68 vs. $114.18 the day before) but a higher close ($115.11 vs. $114.59). Overnight, though, it fell as far as $112.80 and remains low at $112.90 at 11:01 am GMT. The “reason” seems to be actual loading of Baku pipeline oil in Turkey. Or perhaps it’s the dollar rising. Both reasons are given, and as usual, “the dollar is up because oil is down.” In addition, Bloomberg reports, tomorrow’s US inventory report is likely to show a rise in crude by 1.1 million barrels in the latest week because refinery operations are lower than in previous years, with refineries operating at nearly 14% below full capacity.

Meanwhile, a threat to this lovely development is Tropical Storm Gustav, headed out of the Caribbean at hurricane strength and headed perhaps for the Gulf. A Katrina-level hurricane can destroy the US dollar in a day or two.