Posts by "isi"

Is it oil prices that follow the eur/usd or vice versa; when oil was at its highest point, the dollar at its lowest; now as oil hit its lowest point, so was the lowest price of oil. The 6% drop in dollar has pulled the oil price higher by an equal %. If there is too much oil around and the fundamentals for it are on the down side, which way do we expect the eur/usd to go?

Russia now produces more oil than Saudi Arabia! All producers call for oil reduction to shore up prices, and then pump it out as fast as possible to meet their financial demands. There is a glut of oil in the market and increase of almost 10% above mean in stored reserves. The news that comes out daily, clearly shows that the end to the crisis is nowhere in sight (the politicians and the Fed., who HAVE to take an optimistic view, now talk about 2010). In the real world, once sees the effects of the crisis accelerating in the high street, on businesses and on peoples spending habits. Most oil producing countries have budgets for 2009 based on 80 dollar oil. Saudi Arabia may get tired of being virtually the only country that cuts production (they now have a capacity to produce more than double); countries like Iraq need urgently to increase their production and are actively seeking measures to do so. All the above seem to indicate that we will see down pressure on oil prices over the next couple of years.
A lower oil price seems to be supportive of a stronger dollar.