Friday September 12, 2008

NYMEX crude oil falls to $100.10 on US dollar rally

channelnewsasia.com :

Oil prices tumbled on Thursday [11 Sep 2008] as the dollar rallied and demand worries outweighed a powerful Hurricane Ike barrelling through the rig-dotted Gulf of Mexico. NYMEX crude oil fell to $100.10 per barrel in intraday trade in New York, approaching the $100 threshold last crossed on April 1. In London, Brent North Sea crude for Oct 2008 delivery settled at $97.64, the lowest level since March 5. The dollar strengthened again against the euro, which fell below $1.39 for the first time in a year amid growing recession fears in the eurozone. Meanwhile, the US Department of Energy (DoE) lowered its forecasts for 2009 global crude oil demand.

- The fall in the NYMEX crude oil price to the psychologically important $100 support level coincided with the US Dollar Index, USDX, breaking above crucial 80 resistance. USDX watchers will well remember the fateful day when the USDX broke through this 22-year support level on the downside, which then helped to drive a huge commodities rally.

In recent weeks the opposite has been happening as the USDX reversed direction and rocketed off to break in rapid succession the resistance levels of 72, 74, 76, 78 and now 80. In an exact mirror-image fashion, the anti-dollar elements including gold, oil and other major commodities proceeded to fall off the cliff.

I made a call recently for a reversal of this trend, with 3 major factors working toward the bullish cause : the OPEC production cut of 520,000 barrels per day, the imminent lifting of the Beijing Olympics shutdown, and the USDX resistance level of 80 as mentioned above. Already, USDX is pulling back from the 80 level and is now back to around 79.4 at the moment. Could this be *it*? Was $100.10 the bottom? Has OPEC really successfully defended $100 oil? We shall see.

See also :

1. NYMEX crude oil prices fall to $105.46 as Hurricane Gustav fears fade
2. The big Beijing 2008 Olympics China shutdown - commodities fall only temporary?
3. OPEC announces production cut of 520,000 barrels per day

(2008-09-12 21:29:24 SGT) [Energy] Permalink

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