dw57

Don't Believe Long-Term Oil Forecasts

not sure that the dollar has declined that much has it? after all oil is up what 100% or more? but you are correct it has had very little to do with supply and demand
and the export countries desperately need the US consumer to buy their stuff, and that consumer is dollar based. make the dollar decline and they stop buying. raising interest rates may or may not have any impact at all. didn't before now in the last 8 years.


On Nov 09 09:47 AM ringo3khan wrote:

> I think it's important to remember that as much as the price of the
> commodity is determined by supply/demand considerations, it's also
> determined by the value or lack thereof of the U.S. dollar as same
> is held in vast quantities by the producing countries. Thus, oil
> has, in many ways become the new "Currency" and will be for as long
> as it's valued primarily in "dollars"; it's natural that as the instabilities
> in the U.S. financial and economic models become ever more violent
> and less predictable that the dollar will continue to fall in value.
> There is of coure the "model" out there that would indicate that
> if the Fed was to begin to raise interest rates, the dollar might
> begin to strengthen. However, the increased instability and inefficiencies
> of the U.S. society, political system and financial systems may well
> put us in a place where despite interest rate increases, the dollar
> doesn't appreciate significantly in value because, just as may now
> be the case with the currency of Zimbabwe, other countries and central
> banks won't want to be holding dollars in reserve. To the extent
> that this is the case, until such time as a more stable world reserve
> currency can be found, there may be no forseable ceiling on the price
> of oil.

Oil Won't Stay Down for Long

a lot of the price run up in oil was speculation, no question, it was to make up for the loss in incomes in other areas (say stock or CDS or you name it). if it were really a supply and demand problem why was it that were in the same situation in the preceding years as far as how much supply out stripped demand? and if was not speculation why would it go up in large increments in only days? when nothing had happened. and things that seemed to drive it, had been happening for decades.