Oil Rises to Trading Record Above $112

[Hissyspit]

Source: Associated Press

Oil rises to trading record above $112
By GILLIAN WONG, Associated Press Writer
30 minutes ago

SINGAPORE - Oil prices rose to an intraday trading record above $112 a barrel Tuesday after the U.S. dollar fell further and crude supplies to the U.S. and elsewhere were disrupted.

The main driver of crude's rally was a decline in the greenback relative to the euro on Monday, analysts said. Crude oil's recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency because a weakening dollar prompts investors to seek a safe haven in hard commodities such as oil and gold.

"We've seen another swing down in the U.S. dollar so I think we saw short-term traders go back into oil as a hedge against the falling dollar," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia. Light, sweet crude for May delivery rose to $112.48 a barrel in electronic trading on the New York Mercantile Exchange, surpassing the previous trading record of $112.21 set last week.

Read more: http://news.yahoo.com/s/ap/20080415/ap_on_bi_ge/oil_prices

[dkf]

1. Jeez Louise. How much more is the dollar going to fall?

This is ridiculous.

[notesdev]

2. How much value is left in it?

That's how much further it has left to fall.

OK, maybe not the whole thing... but pretty darn close to it. Figure about the time our standard of living is on part with China.

[dkf]

3. Traders Aren't Buying G7 On Dollar

the U.S. Federal Reserve and the Bank of England have cut rates repeatedly in a bid to boost growth in the face of an economic slowdown and falling consumer confidence. A low dollar boosts U.S. exports but it also increases the cost of commodities priced in dollars, i.e. oil, for domestic consumers and can dissuade foreign investors from buying U.S. assets (See: "Oil Bubbling Up On Dollar").

One of the options open to the G7 is to intervene and buy the dollar in a bid to raise its price. The last time the G7 intervened was in 2000, when it bought the euro (See: "Time For The ECB To Start Buying Dollars").

"Despite the change of G7 language, current monetary policy is not consistent with intervention," said BNP Paribas economic strategist Ian Stannard. "The Fed is pursuing an aggressive easing policy and the ECB remains hawkish--in this climate pressure will continue to mount on the dollar."

http://www.forbes.com/markets/economy/2008/04/14/dollar-g7-update-markets-currency-cx_jm_mlm_0414markets43.html

[notesdev]

4. The Fed and the G7

are headed in opposite directions on monetary policy.

The Fed's policy is recklessly inflationary; its bottom line is to put the taxpayer and the value of the dollar in the place of a backstop against a collapsing real estate industry (whose losses are no longer limited to subprime, or even to residential real estate). The public is now assuming the downside risk to bad bets which could number over $450 trillion (not a typo) before this is all over, and doing it in a context of a federal government whose spending is also obscene. Since so much of our economy has gone from production to trade, there isn't as much goods production as there once was to keep our currency strong - the dollar is losing this battle (and has been since 2002, when the housing bubble started).

You thought that was home prices rising? To some degree, maybe; for the most part, though, it was the dollar dropping.

The Fed is quite simply out of control; its fundamental role needs to be questioned, and it needs to be legally determined once and for all whether it is a government or a private organization. It wields far too much power for it not to be directly accountable to Congress or the President.

[Bigmack]

5. $113.34 at 7:50 PDT.... nt