Wednesday March 12, 2008

Crude oil reaches $109.72, breaks records for 5 days running on weak dollar

bloomberg.com :

Crude oil rose to a record for a fifth day, climbing above $109 a barrel in New York, after the weak dollar prompted traders to invest in commodities. Crude oil for April delivery rose 85 cents to settle at $108.75 a barrel at 2:46 p.m. on the New York Mercantile Exchange, a record close. Futures surged to $109.72 a barrel today [11 Mar 2008], the highest since trading began in 1983. "The decline of the dollar has a lot to do with the rise in prices," said Frank Verrastro, director of the Center for Strategic and International Studies energy program in Washington. "People are looking at the oil market as a safe place to park their money in this time of economic uncertainty." The euro rose to $1.5495 against the dollar, the highest since the single currency's introduction in 1999, after European Central Bank council member Axel Weber said he doesn't see any leeway to lower borrowing costs.

The U.S. Dollar Index [USDX], a weighted gauge against the euro, yen, pound and three other currencies, fell to the lowest since the basket started trading in 1973 on March 7. The index touched 72.474 today, just short of the record low of 72.462. "This is all about the dollar," said Adam Sieminski, Deutsche Bank's chief energy economist in New York. "We started the year with the dollar index at 76 and the drop to 72 has been good for a $15 gain in oil," Sieminski said, "When the index hits 70 the price of oil will hit $120."

- The technical analysis story for crude oil gets more interesting all the time. It looks like we have moved very quickly into the $105-110 trading range, much faster than expected. The next resistance levels look to be $110, $120, $150 and $200, and support levels remain at $100, $95, $89 and $85. Lots of people have been looking for a pullback and wondering just where it will happen at, but crude simply keeps powering higher.

See also :

1. Crude oil hits $108.21 record as returns outpace stocks
2. Oil hits $105.97 record as dollar drops to all-time low
3. OPEC keeps output steady in face of $100 oil
4. Gold and oil soar as inflation fears grow ($103.95 oil, $992 gold)

(2008-03-12 09:18:20 SGT) [Energy] Permalink

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