27/02/2008

Crude doom day..

Crude oil rose to a record as a weakening dollar spurred investors to buy commodities priced in the U.S. currency.
Futures jumped in New York and London as the dollar fell to an all-time low against the euro. . A government report later today is expected to show U.S. crude inventories rose last week.
This record is purely a play on the weakness of the dollar, as investors use both crude and gold as a hedge against inflation, if the dollar keeps getting weaker, and we don't have inventory builds today, it could drive prices towards $105.

Crude oil for April delivery rose as much as $1.20, to $102.08 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $101.52 at 9:41 a.m. London time. Prices pared gains after a Persian Gulf official familiar with Saudi Arabian oil policy said prices are higher than they should be and inventory gains are likely to continue through to the second quarter.

The dollar weakened to $1.5088 a euro, the lowest since the European single currency was introduced in 1999. The dollar has declined against all of the world's 16 biggest currencies in the past 12 months apart from the Korean won and South African rand.
Because oil has an intrinsic value, it's not exactly sensible that it becomes cheaper in other currencies so you get an adjustment upward in the U.S. dollar value of oil, the general strength of commodity prices would instantly improve sentiment toward the oil price.
Brent crude for April settlement climbed to $100.53 a barrel on London's ICE Futures Europe exchange, the highest since trading began in 1988. It traded at $100.08 at 9:42 a.m.
As we mentioned many times before the market is being driven by speculation, fear and psychology, there were some investors who shorted oil when we reached $100 last week, for whatever reason, and now they panicked.
Hedge-fund managers and other large speculators increased net- long positions, or bets on higher oil prices, in the week ended Feb. 19, according to a Commodity Futures Trading Commission report issued at the end of last week.
OPEC crude-oil supply will fall 200,000 barrels a day, or 0.6 percent, to 32.45 million barrels a day this month, according to preliminary estimates from PetroLogistics Ltd. The group supplied 32.65 million barrels a day in January, data from the Geneva-based tanker-tracking service showed.

Ministers from the 13 members of the Organization of Petroleum Exporting Countries are scheduled to meet in Vienna on March 5 to discuss oil quotas. OPEC produces more than 40 percent of the world's oil.
Inflation is at hand and we are seeing a massive flow into commodities, but in the long run the crude speculators will pay the price for the attitude they are now taking.. crude demand will continue to decrease as other alternative energy sources are used..the higher the crude the less demand...

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