Deus Vult!
All the players in the market are confused. Earlier this week Fed Chairman Bernanke announces that QE3 and inflation are likely. Two days later he walks that statement back and says that the Fed is not likely to print money to buy bonds and print money. At the beginning of the week price spiked at $98.69 and fell the very next day to $95.69 and closed $1.55 higher today. From mid-June until after the July 4th holiday, crude was in a channel between $90 and $95; in July the channel is now $95 to $99.
As the debt ceiling talks deadlock, the dollar falls and its inverse dance partner, crude, rises. The more the deadline approaches without resolution, the more likely that the dollar is pressured downward. As the dollar falls, commodities are where investors place their bets. If there should be even greater failures of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) and the euro falls while Washington is in gridlock then the market is in uncharted territory and no one quite knows where things are headed.
For the week, WTI+$2.09,$97.24; Brent+$1.16,$117.26; RBOB+5.88¢,$3.1293; HO+3.05¢,$3.1180.
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