Last time I checked the price of a barrel of crude oil — it was not a pretty sight.

$72.90, up almost a buck over yesterday’s close. Futures traded as high as 73.10 today.

Not a good day for the dollar either, with the euro hitting a new high of 1.37.

The reason for the rising price of oil is a report that came out Monday from the International Energy Agency. The agency forecast that  world oil demand is now expected to rise faster than previously expected over the next five years while production declines.

With oil prices rising on this cheery news, it’s not surprising that today has not been a good day for airline stocks. As of this posting, shares of US Airways are down almost 6% on the day, while shares of Continental are now down almost 4%, ditto for shares of AMR.

The reason for the sinking dollar is increasing concerns over an issue we’ve been beating the drum over for more than four years in our weekly Market Review in PBB — yes, that mortgage fantasy bubble that has now broken in a big way. Debt rating agency Standard & Poor’s said Tuesday that it might downgrade $12 billion of residential mortgage-backed securities, or RMBS. S&P also said it is changing the way it evaluates subprime RMBS, partly because of unprecedented levels of misrepresentation and fraud, combined with potentially shoddy loan data.



Nice.

Obviously, given this news, foreign investors have decided that maybe euros are the place to park money now — not the dollar.