Crude and product prices are now in 2008 mode. Any news is the traders' rationale for bidding the price higher and higher. Who can blame them? The middle east is in turmoil. The Libyan regime is now targeting oil fields and NATO may have inadvertently killed rebels. The Syrian dictatorship has killed ten people in the latest round of unrest. Yemen faces more face to face fights between factions. In the U.S., there seems no solution to the budget battle and a partial government shutdown is now imminent.
The real culprit for the majority of this huge rise in crude futures and gasoline street prices is government inflationary policy. QE2 has debased the dollar in an attempt to keep equities high but it has also driven commodities higher and the dollar lower. People selling oil get paid in dollars and want to be paid without Bernanke's inflation discount. This is why gasoline street prices continue to rise despite less than stellar economic performance.
The weekly tally tells the story: WTI +$4.85 (+4.5%), $112.79; Brent +$7.96 (+6.7%), $126.65; RBOB +10.94¢ (+3.5%), $3.2607; HO +18.42¢ (+5.9%), $3.3197.
No comments:
Post a Comment