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Oil Up Over $10 In Trading Day

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Oil rose $10.67 (8.35%) today as the dollar dropped on news that surprised analysts regarding employment in the US. Here is two investors takes via Bloomberg:

Oil is “being used as a hedge by speculative buyers for the weakened dollar,” said Gary Adams, vice chairman of oil and gas consulting at Deloitte & Touche LLP in Houston. “We are seeing that the price will continue to go up as investors look for alternatives.”

and

“This is all just a plain old stampede,” Tim Evans, an energy analyst for Citi Futures Perspective in New York, said in an e-mail. “The sellers have basically pulled their orders so it doesn’t take much incremental buying to push prices higher.”

Oil first spiked last night after US markets closed. This morning I mentioned it was up over $6. For a time, it looked like it would stay there, but by the close of the US markets Friday evening, it was up over $10. In addition, the market felt oil-based pressure and jobs-number surprise, which both added to pessimism and talk of recession.

This current economics situation is really something. Things are extremely volatile, but at the same time it doesn’t appear to have really nasty consequences, as we’re still without a by-the-book recession. We’ll see where this goes over the summer.

Recall, last year things calmed down from mid-June through August between nasty stretches.

UPDATED @ 4:23p: Barry Ritholtz points out the irony a specific magazine calls from the Economist.

Megan McCardle was writing about $40 oil a few years ago, but will now trade her blood for it.

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Written by walonline

June 6, 2008 at 3:24 pm

Posted in Economics, Energy, Markets

Tagged with , , ,

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