Oil Surge, Weak Data Pare Dollar Gains

The US dollar continued to rise against the Euro on Friday despite very weak consumer confidence data. EUR/USD fell more than 100 pips from yesterday’s mid-1.5600, past expected bear target of 1.5600 to a session low of 1.5550 today.

Since this level marks the support of another trendline, we could see some Euro rebound from here for the time being. And as anticipated, USD/CHF achieved initial bull targets after breaking above 1.0300 yesterday, hitting resistance around 1.0430 before bouncing down.

There were hardly any economic releases out today except for the US final Michigan sentiment survey, which showed the overall index falling to 62.6, from 69.5 in March. This final figure was even worse than the preliminary estimate of 63.2 reported two weeks ago. The April current conditions index fell to 77.0 from 84.2 in March, while the expectations index fell to 53.3 in April, from 60.1 in the previous month. US consumers haven’t been feeling this downbeat about their financial situation and anxious since March 1982, which was 26 years ago.

High gasoline prices are also causing some people to make fewer trips to the shopping mall, with the average price of regular unleaded gasoline rising to a record $3.58 a gallon yesterday according to the AAA.

Spend to Help the Economy

Back to the results of the survey: About 9 out of 10 respondents believe the US economy is now in recession. US president Bush said today tax rebates through the fiscal stimulus plan will help the US economy emerge from the slowdown, but he may be unrealistically over-hopeful, like some other market observers. According to the same Michigan survey, many are expecting to use the government rebate checks to settle part of their debt or hoard them as savings - which isn’t something the government wants Americans to do.

Oil Up

Oil prices are rising past $118 per barrel again following reports of further US-Iran tensions - it was reported that the US Navy fired warning shots on fast boats off the Iranian coast. There are also interruptions to oil production in Nigeria due to militant attacks on a pipeline and a union strike.

Comments

[aamerican]

Its funny, any time a invester, author in oil stocks mention US-Iran tensions, oil automatically jumps. Must be power of the press in the Bushmen regime! Now if we can start a rumor of world peace or a end to the war, we may have something.

[JREwing]

Spare me your sixth grade Michael Moore Microcosmos. Please.

[JanRogozinski]

aamerican's observation is accurate. I sold my oil ETFs becuae I can't tell whether oil is in a bubble or not. It's true that the world is running out of oil, but I suspect the recent jumb past 100 is mostly speculation.

HOWEVERRmoil futures

[JanRogozinski]

Sorry my finger slipped.
However, the bush league keep making threats against Iran. It was insane and dumb to commit aggression against Iraq. Which took a lot of supply out of the market. It may well be that bush is insane and stupid enough to commit aggression against Iran, which would take oil past $300 a barrel That possibility is a reason to keep some money in oil futures.

[sopocistudio]

I'd be the first to admit that's there's a "fear factor", "speculation"... or whatever name one wants to hang on it, in the current price of oil, but not being a "trader", I don't really care. Looking at the intermediate term (1-3 years out), I don't see oil going anywhere but up; hence a fairly heavy exposure to oil stocks.

Jan

[gordon]

It's all out of the Rove Playbook. On the eve of the New Hampshire primary, the fabricated, from file footage w/ dubbed audio Iran boat threat was concocted by Cheney-Rove. McCain needed a victory. Now, while Billary & Obama churn, the latest bogus story puts the spotlight back on McCain, the " keep -you -safe guy"... for a hundred years. Syrian ammunition building story also pure fabrication, with no way to prove it, # 1 Rove Rule is FEAR and more FEAR, works every time.

[AmesTiedeman]

Take a look at DUG if you think oil is going to fall.