(AP) Oil dips to near $119 on stronger dollar

K

ktgtrader

Oil prices dropped to near $119 a barrel Friday in Asia as a strengthening dollar and worries about economic growth offset supply concerns over Turkish pipeline sabotage that was claimed by Kurdish rebels.

Light, sweet crude for September delivery fell 90 cents to $119.12 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose $1.14 cents overnight to settle at $120.02 a barrel.

www.theoddlot.net
 
Well, if this whole administrations goals haven't been completely fulfilled. We have a war in multiple countries, Oil doubled, Stock Market yo-yo from High to Low to High to Low. Trillions were made, and set up money flow for decades to come.


www.theoddlot.net
 
Has anybody else noticed the crap being spewed out there? Here is what I mean - it is round robin.

The dollar is getting stronger, so oil prices are going down. And vice versa - the oil price is going down, so the dollar is getting stronger.

It can't be both ways!

Here is another one...

The markets are going up, because the price of oil is coming down....but, wait, aren't the pundits saying that the price of oil is coming down, because of weaker demand...which means less business activity....which should be BAD for the markets, right? So, how the heck are the markets going up?

No shock here - I am confused :confused:
 
Quote from gastropod:

Has anybody else noticed the crap being spewed out there? Here is what I mean - it is round robin.

The dollar is getting stronger, so oil prices are going down. And vice versa - the oil price is going down, so the dollar is getting stronger.

It can't be both ways!
More...

Yes, it can.
I'd explain it to you, but it would take an Econ. 101A course in order to explain it.

Here is a summary that was issued by Goldman Sachs Research Paper back in May of this year:

“So is the weaker dollar driving oil prices up or are high oil prices driving the dollar down?

The Goldman analysts (Nordvig and Currie) argue the latter because oil exporters import more from Europe than America and hold less of their oil revenues in dollars. A second factor lies with central banks. Because the Fed focuses on “core” inflation (which excludes food and fuel), whereas the ECB targets overall inflation, America’s central bank runs a looser policy in response to higher oil prices, thus pushing the dollar down.”


The Goldman paper suggests that the United States’ energy inefficiency, its modest exports to the oil-exporting region and a reduced willingness on the part of the oil exporting economies to hold dollars – together with the Fed’s tendency to target core inflation while the ECB targets absolute inflation – explains why the dollar has tended to fall when oil rises. Goldman found that the negative correlation with between the dollar and oil holds even if oil is priced in euros or a basket of global currencies – i.e. a high real oil prices contribute to a weak dollar more than a weak dollar contributes to a high dollar price of oil.

So, a key factor is the fact that ( up until now ) global growth has been far stronger than US growth. The realization that Europe and the emerging country economies have now fallen prey to slower growth this past Friday has helped push the DOLLAR UP, and crude oil down.
 
Landis82, yes, I did take the Econ 101 courses...just that I had the most boring human ever created teaching them....needed a No-doze(TM) the size of a grapefruit just to make it to the end of the class ;-)

BTW, thanks for responding! Ok, if I understand your paraphrasing of the GS report....the strength/weakness of the dollar is less important than the desire of the oil rich countries desire for USD? If that is correct....would the price of oil gone down more yesterday, had the oil producing countries desired the $ less?

Thanks,
gastropod
 
Quote from Landis82:

Yes, it can.
I'd explain it to you, but it would take an Econ. 101A course in order to explain it.

Here is a summary that was issued by Goldman Sachs Research Paper back in May of this year:

“So is the weaker dollar driving oil prices up or are high oil prices driving the dollar down?

The Goldman analysts (Nordvig and Currie) argue the latter because oil exporters import more from Europe than America and hold less of their oil revenues in dollars. A second factor lies with central banks. Because the Fed focuses on “core” inflation (which excludes food and fuel), whereas the ECB targets overall inflation, America’s central bank runs a looser policy in response to higher oil prices, thus pushing the dollar down.”


The Goldman paper suggests that the United States’ energy inefficiency, its modest exports to the oil-exporting region and a reduced willingness on the part of the oil exporting economies to hold dollars – together with the Fed’s tendency to target core inflation while the ECB targets absolute inflation – explains why the dollar has tended to fall when oil rises. Goldman found that the negative correlation with between the dollar and oil holds even if oil is priced in euros or a basket of global currencies – i.e. a high real oil prices contribute to a weak dollar more than a weak dollar contributes to a high dollar price of oil.

So, a key factor is the fact that ( up until now ) global growth has been far stronger than US growth. The realization that Europe and the emerging country economies have now fallen prey to slower growth this past Friday has helped push the DOLLAR UP, and crude oil down.
More...

Ok, what you are saying is the world looked at big picture and saw big growth in developing nations. And this growth was bigger than the growth and productivity of the USA. So this made the USDollar worth less. But this global growth that was bigger than USA growth did not last long. Now other growing nations have inflation too. Now the USDollar is getting strong again when it is weighted against the world as a whole because emerging nations have inflation? Yes?
 
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