We are supposed to beware of Greeks bearing gifts but today is the traditional feast of Three Kings whose gifts included gold. Is oil moving towards a golden future? Or are prices falling because of the strengthening dollar? Is crude too high priced and the market is now correcting itself? The price of crude has not been this low since December 17 when it settled at $88.02.
The economy seems to be improving globally and tomorrow's jobless report is supposed to further indicate that there is even improvement in the unemployment numbers in the U.S. The problem for traders assessing the global economy is how to figure what is happening in Europe with the PIGS. The dollar's rise seems to indicate that there may be problems lurking in Europe that are not common knowledge yet. Thus the rise of the dollar.
For all the talk about inventories being drawn down, the market is in contango and so traders believe that current prices will stay lower than future prices. This may just be the exuberance of a new year. The dollar's rise meant the normal fall of crude and the fundamentals may not have played a big role in crude's movements.
Today, crude -$1.96, $88.38; gasoline -0.27¢, $2.443; distillate -3.13¢, $2.5112.
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