One stop forward...

two steps back.

Oil jumps on Fed discount rate cut, hurricane
By Matthew Robinson

NEW YORK (Reuters) - Oil prices jumped on Friday after the U.S. Federal Reserve cut a key interest rate to calm financial markets and on concerns Hurricane Dean could hit Gulf of Mexico installations.

U.S. crude (CLc1) settled up 98 cents at $71.98 a barrel, after trading as high as $72.54. London Brent crude (LCOc1) was up 67 cents at $70.44.

Forecasts showing Hurricane Dean could spin toward Gulf of Mexico oil rigs and refineries next week supported oil markets that were nervous about potential damage to the region, which pumps a third of U.S. oil output.

But late Friday, a survey of weather models monitored by Reuters showed most forecasters predicting the storm would pass south of offshore U.S. natural gas and oil installations.
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In a rare statement between scheduled meetings, the U.S. central bank's policy-setting committee said risks to economic growth "have increased appreciably" due to global credit crisis and financial market turmoil.

"The cut may ease the liquidity crisis in the United States," Christopher Bellew of Bache Financial said. "Of course, you could interpret it as an indication of how serious they think the problem is."

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Generally speaking, this is why some favor a hands-off approach to artificially manipulating the market. Treat the underlying disease, not the symptoms, right? Else you just put off the reckoning for another day, or shift the burden.

Among economists who saw hypocrisy in wealthy investors and Wall Street traders urging speedy Fed intervention -- a turnabout from their usual stance -- was Richard Yamarone, chief economist for Argus Research in New York.

"My mother always told me those who play with fire get burned," he said yesterday. "Here, that apparently doesn't hold true. Someone is making my mother out to be a liar, and that's not a good thing."