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Dollar Higher on 3 Ps - Paulson, Plosser, Price of Oil

There has been demand destruction in the United States oil market. And, while the U.S. isn't the only dog at the fire hydrant, it's still the big dog at the fire hydrant.

That said, oil is leading the Dollar and not the other way round.

The "fever" has broken in the oil market and the bulls have taken a "breather" from their earlier "Peak" oil frenzy -- there is no "Peak" oil in the "near" future -- within an economically meaningful time frame.

Without the bulls being able to scream "Peak" oil at the bar with their whiskey, the oil market is settling down.

Huge investment is being made in deepwater, ultra-deep drilling rigs for a substantial "push" on the world's continental margins -- the "new frontier" in oil exploration.

Ghawar -- the Saudi oil field and largest in the world, is an example of continental margin oil -- Ghawar is unique in that it's onshore as is most of its sister oil fields in the Middle East.

That is why Ghawar has been unique -- but now that the "rest of the continental margin" is beginning to be explored offshore and huge oil finds are being made (offshore Brazil) "Peak" claptrap is fading.

And a healthier economy is the result -- which bulsters a slightly rising Dollar. If the United States is open for business, the dollar has a slightly higher value.

Yes, the banking debacle has still not "cleared decks," but the market is "figuring in" the losses in that sector of the economy -- other sectors have reason for optimism on the steadying oil market.

So, with the oil fever broken, traders are starting to look into other avenues (market sectors) to make profit.

Good, oil should be a "work horse" and not a "show horse" in the world economy: Oil is a means to an end: economic productivity and growth, not an end in itself.

Oil Is Mastery for the real scoop on the oil supplies and the oil market.