Wednesday, March 17, 2010

Economic wiggle room puts downward pressure on the dollar and upward pressure on crude

SHOOT: Interesting how the increase in the price of crude means the economy is expanding, but at the same time, those very increases in crude prices reign in economic expansion. 'Wiggle room' is the appropriate epithet here.
clipped from
FILE - In this Jan. 14, 2010 file photo, an oil pump works during sunset in the Persian Gulf desert oil field of Sakhir, Bahrain. Oil prices tumbled to near $79 a barrel Monday, March 15, 2010, dragged down by a stronger dollar and increasing investor concerns about energy demand. (AP Photo/Hasan Jamali, File)

NEW YORK (AP) -- Oil prices climbed back near $82 on Tuesday as the Federal Reserve said again that it will hold interest rates at record lows as the U.S. economy continues to recover.

Benchmark crude for April delivery rose $1.90 to settle at $81.70 on the New York Mercantile Exchange.

The stock market inched higher, reassured by the Fed's steady-as-she-goes approach and its view that the economy appeared to be stabilizing, although it was not fully recovered.

"The Fed has at least the perception of more wiggle room, and that puts downward pressure on the dollar and upward pressure on crude."

Oil prices have swung between $70 and $85 for the better part of six months as global crude demand slowly recovers from the Great Recession but remains weak in developed countries.

"We have shifted from a bullish to a bearish trading posture," Ritterbusch and Associates said in a report. "We will look for a resumption of selling by midweek."

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