Wednesday, November 21, 2007

Oil Surges Above $99 as Weaker Dollar Spurs Commodity Demand

Nov. 21 (Bloomberg) -- Crude oil rose above $99 a barrel for the first time in New York as a weakening U.S. dollar increased demand for commodities.

Oil, gold and silver gained as the dollar fell yesterday to a record low against the euro on speculation that the Federal Reserve will lower interest rates for a third time this year. Oil gained after Royal Dutch Shell Plc said a fire more than halved output from a 155,000 barrel-a-day oil-sands plant in Alberta, potentially cutting shipments to U.S. refineries.

``Oil has become a hedge for investors and the weaker U.S. dollar has contributed to the rise in gold and oil,'' said Victor Shum, senior principal at consultants Purvin & Gertz Inc. in Singapore. ``The price strength in oil is also supported by the tight fundamentals.''

For more, go here.

NVDL: OPEC are saying $100 oil is cheap, particularly when one factors into it the fact that a large proportion of the oil price is made up of taxes. It's a well made point, but unfortunately, not one that makes it all better.

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