Logical answer: the markets expect a slower US economy, resulting in lower demand for oil, and possible decline in US interest rate, thus the decline in US $, less attractive for foreign money. But being logical in the markets is not really a sure thing to be rich !
Oil should bottom in the mid-50's. The dollar will likely see some strength in the very near term but should roll over once the foreign central banks step in with more tightening measures as the Fed gets set to cut.
Hypothetically - appreciating dollar buys less oil.... But it doesn't look like that's going to happen in the near term. Iran missile launches, Nigeria attack threats, colder weather.... We're positioning for a rise to low 60's next week. Tuesday looks to be a reversal day technically with a lower low and a higher close.
Excellent Commentary All....... The real question here is...how sensitive is the US consumer to oil prices... If oil were $100...what changes would occur in US demand ? The other question is...at 100 what changes would occur in all other countrys demand ? Since the bottleneck would obviously be removed with the drop in demand from the worlds consumers...the majority of which live in a $200 to $800 per month world...the demand for oil would drop like a stone... And guess what happens when demand drops like a stone... Do you think that the welfare oil states will enjoy selling at high prices when it means less revenue to them ? Of course not...for some of these welfare states oil revenues are 80% of their exports.... These people blabbing away loosely about $100 oil obviously have forgotten how oil is really purchased...and who really purchases it... ................................................................................ However as long as the Bush Oil Administration is in office...you can rest assured that middle east unrest will be a constant every waking day event ...as they play the Americans.... All in all...if the Bush Oil Administration were never present ...oil would be around $42 today....and that would be because of China...etc... You can expect daily chaos created by the American government toward the oil producing countries...as long as the Bush fiasco is in office.... It is unbelievable how much damage a handful of average people can cause to the world economy.... http://www.atimes.com/atimes/Middle_East/HK03Ak01.html
Low $60's as we forecasted and still looking strong... just wish the dollar was less of a chop-fest...