Thursday March 13, 2008

Crude oil hits $110.20 record on dollar fall

channelnewsasia.com :

Rocketing oil prices broke through 110 dollars per barrel for the first time in New York on Wednesday [12 Mar 2008] continuing a record run amid supply concerns and fevered market speculation. Traders said the ailing dollar also has also fuelled a spike in world oil prices because crude is priced in dollars and has become cheaper to buy for purchasers holding stronger currencies. New York's main oil futures contract, light sweet crude for delivery in April, ended up 1.17 dollars at a record closing high of 109.92 dollars per barrel after trading as high as 110.20 dollars. The US dollar meanwhile plunged to an all-time low against the euro following publication of strong eurozone industrial production figures.

bloomberg.com :

The dollar fell to the lowest since 1995 against the yen after U.S. President George W. Bush said the dollar is "adjusting". The dollar touched $1.5573 per euro, the weakest level since the European currency's 1999 debut. The US currency reached 101.10, the lowest since December 1995. The dollar also fell as firms from Citigroup to Goldman Sachs said yesterday [12 Mar 2008] the Federal Reserve's plan to inject $200 billion into the banking system may fail to break the freeze in money-market lending. Traders bet the Fed will cut its rate as much as 0.75 percentage point on March 18 to avert a recession.

Crude oil in New York touched $110.20 a barrel, the highest intraday price since the futures began trading in 1983. The US Dollar Index [USDX] traded on ICE Futures in New York, which compares the currency to those of six trading partners, declined to a record low of 72.20 yesterday.

- One of the Wall Street folks was quoted earlier as saying USDX 70 = $120 oil. I don't know how he came about this particular equation, but it just might come to that. We'll have to get into that $110-120 trading range first. It looks to me, even for an oil bull/dollar bear like myself, that we are getting way over-extended here. Could $120 be an intermediate resistance level for crude oil, and USDX 70 be interim support? We'll see.

Update : USDX just broke below 72. Looks like we're on our way to 70.

See also :

1. Crude oil reaches $109.72, breaks records for 5 days running on weak dollar
2. Crude oil hits $108.21 record as returns outpace stocks
3. Oil hits $105.97 record as dollar drops to all-time low
4. OPEC keeps output steady in face of $100 oil

(2008-03-13 13:46:21 SGT) [Energy] Permalink

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