With some renewed strength in the American dollar, coupled with decreased demand, the price of crude oil for September delivery closed the week at US$111.
“The dollar is on fire again so that's causing people to re-evaluate everything,” said Phil Flynn, oil analyst at Alaron Trading Corp. in Chicago. “It means oil prices could fall dramatically. We could see prices get to double digits if this continues.”
An OPEC forecast of lower demand also put downward pressure on prices.
Newfoundland and Labrador finance department officials may not be sweating yet, but if the trend continues to the end of the year, their forecast average price of $87 might not hold up.
Even if the provincial government skates through the current fiscal year, it may have to restrain spending over the next couple of years or - a more likely scenario - boost borrowing to fuel the spending spree.
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