A Chequer-Board of Nights and Days

Crude oil prices fell more than 5.4 percent on Friday in the biggest one-day slide since 2004 as dealers turned their focus to rising supply levels and weakening global demand.

A rebound in the U.S. dollar encouraged the sell-off, applying downward pressure across the commodities markets by weakening the purchasing power of buyers using other currencies, dealers said.

The slide adds to a more than 20 percent fall in the price of crude since mid-July and could increase the chance oil cartel OPEC will cut official production limits when the group meets in Vienna on September 9.

U.S. crude fell $6.59, or 5.4 percent, to settle at $114.59 a barrel -- the biggest fall in percentage terms since December 27, 2004. London Brent crude fell $6.24 to $113.92 a barrel.

"People who were buying yesterday are taking profits today," said Peter Beutel, analyst at consultancy Cameron Hanover. "There is also renewed technical selling and talk again of demand destruction. The dollar is strong again too."

In a just world, this whole episode would remind people that fundamentals like the laws of supply and demand do much more to determine the price of oil than do ridiculous conspiracy theories such as those mocked in the title of this post. But of course, we know that the punditocracy and appreciably large portions of the political class will fall back anew on their tired, old shibboleths the next time that there is an uptick in oil prices. Some people, alas, continue to refuse to take that all-essential Economics 101 class.