Monday April 06, 2009

NYMEX crude oil prices rise above $53 on global stimulus, OPEC production cut

bloomberg.com :

Crude oil prices rose on NYMEX on speculation global economic stimulus efforts and OPEC production cuts may slow growth in world stockpiles of the fuel. NYMEX oil prices climbed above $53 a barrel as the G20 stimulus plan to spend $1 trillion prompted the dollar to drop for a third day. OPEC production cuts imposed in Dec 2008 are being complied with and have helped stabilize prices, Algerian Oil Minister Chakib Khelil said. Crude oil for May 2009 delivery rose to $53.54 on NYMEX.

The US dollar index fell to a one-week low, to $1.3562 vs the euro. Prices rose last week as the dollar weakened and as world equity markets rallied on speculation the worst of the global recession may be over soon. While OPEC has contained output, the recession will limit price gains and oil is likely to trade between $50 and $55 a barrel, Khelil said.

- That's a good one, simply pointing out that current crude oil prices are currently in the $50-$55 trading range. The question now is whether the oil prices are responding to the purported second-half recovery that the MSM (aka "mainstream media") has been trumpeting or whether they are responding to the fall in USDX, the US dollar index, where it is apparently attempting to consolidate between 84 and 86.

I've got a hunch it's a bit more of the latter so a good bet would be to watch USDX carefully to see where it's going, and hence where crude oil may also be going. If the USDX is too abstract for you, you can try watching USD/EUR (also found here), where USD/EUR=1.35 looks like a great place for a game of "tug-of-war".

See also :

1. NYMEX crude oil recovers from $32.40 low after 2.2 mbpd OPEC production cut announced
2. NYMEX crude oil near $47 after surge as OPEC weighs production cut
3. US dollar index falls below 84 as Fed ramps up printing press
4. Gold jumps over $950, crude oil rises above $50 as inflation concern spurs commodities

(2009-04-06 19:19:28 SGT) [Energy] Permalink

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