Posted on 06/16/2008 8:00:37 AM PDT by EagleUSA
NEW YORK (AP) -- Crude oil futures hit a record close to $140 a barrel Monday as the dollar weakened against the euro. Retail gas prices rose to a record $4.08 a gallon. Light, sweet crude for July delivery rose to $139.89 before retreating to trade up $3.62 at $138.48 a barrel on the New York Mercantile Exchange.
Many investors buy commodities such as oil as a hedge against inflation when the dollar falls. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline is a major factor behind oil's doubling in price over the past year.
The euro bought $1.5504, a sizable increase from $1.5354 late Friday in New York. The British pound rose to $1.9668 versus $1.9469 in New York.
(Excerpt) Read more at biz.yahoo.com ...
Bingo. You have the whole economic problem in a nutshell.
$7.5B for these two is their FEES from trading derivatives.
By 2003, the game was well under way. Only beginning early last year did the game begin to get out of hand, and right now, of course, it's way out of hand and very distortive of mkts.
Good trading to you!
What must happen is that CFTC need to reclassify investment banks when acting as agent for their clients. When big inv't banks trade for their own accounts, CFTC -- quite accurately -- classifies them as ''reporting traders'', otherwise known as ''large specs''.
When, however, these same banks act as agent for a client, say a pension fund or an endowment, they are classified as ''commercials'', aka ''hedgers'', and are not subject to position limits in any CFTC-regulated market. This is, of course, pernicious nonsense.
All that has to happen is for CFTC to reclassify banks-acting-as-agent as large specs...which they in fact are. We don' need no steenken Regress on this, m'friend.
A year ago 1 Euro = 1.35 Dollars oil was at $ 70 dollars.
Now 1 Euro =1.55 Dollars and oil is at $ 140 a barrel.
In other word the dollar dropped by 15% versus the Euro from a year ago but the oil barrel surged by 100% for the same period of time.
The oil speculators are not following any market drivers or fundamentals, they are only going crazy and wild, and they must be stopped.
As always, the knee-jerk tendency to blame Bush-Cheney for every problem known to man is based on ignorance or venality, maybe both. Congress never enacted the Bush-Cheney energy policy. Furthermore, Congress has been sitting on its collective hands about energy since at least 1973. Let's see now, during that same period we've had presidents Nixon, Ford, Carter, Reagan, GHW Bush, Clinton and GWB. We've had Dem-controlled Houses for that entire time except for the period between January 1995 and January 2007. In other words, Republicans controlled the House for just 12 of the last 34 years since the 1973 oil shock. They did not control the Senate for the first two years of the GWB administration or the second two years.
The 1973 oil crisis began on October 17, 1973, when the members of Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria and Egypt (the United States, its allies in Western Europe, and Japan).
[At] The same time, OPEC members agreed to use their leverage over the world price-setting mechanism for oil in order to raise world oil prices...Because of the dependence of the industrialized world on crude oil and the predominant role of OPEC as a global supplier, these price increases were dramatically inflationary to the economies of the targeted countries, while at the same time suppressive of economic activity. The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency. The United States of America, however, failed to produce any major intitiatives towards reducing its foreign dependency.
As the hedge funds are simply looking for a place to park their money to weather out what is, in essence, a negative rate of return found in more traditional investment options.
And the only way inflation will end is if the dollar is strengthened and interest rates rise. But the Fed is more concerned with repeating the mistakes of the Carter administration... than avoiding them.
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I assume that you mean those in Congress (like McCain) who prohibit us from accessing the 16,000,000,000 barrels of oil that we have within our own borders.
Thank you for pointing that out to the fools who think the "weak dollar" is one of the great reasons pushing the price up. The price is also sky rocketing in parts of the world where the euro currency rules. This price surge goes well beyond normal supply/demand. This is all happening when there is no shortage of oil on the market.
Agree 100%. Math is a very stubborn fact but the fools will not believe it.
Not at $140 a barrel.
Try holding out for $40 a barrel and see how much oil you can buy.
is a rational market.
Coincidence?
I think not.
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