Everyone is happy that oil is down the past 2 weeks, maybe oil is well again (I’m sorry, these things just slip out when you write these articles!)…
You hear a lot of “reasons” from a lot of “experts” trying to explain away the action but you never hear this one.
We buy oil with dollars! “Duh“, you say. When I say “we,” I mean the planet Earth, not just us. Oil is priced in US dollars so (and this is a stretch that seems to elude most analysts) when the Dollar is strong you get more oil per dollar.
On November 1, a Euro cost $1.22. Today a Euro costs $1.16, a 5% drop.
On November 1, oil cost $60 per barrel. Today oil is $57 per barrel, a 5% drop.
It’s the weather, it’s the demand, it’s the hurricane, it’s China… Nah!
Buffet made a big bet against the dollar and the cognoscenti made a big bet on oil. Buffet was wrong and so the oil market begins to unwind.
There are still upcoming seasonal factors that will drive price up soon but always watch the dollar (and dollar futures), it is a major factor in determining oil’s path!
ps – gold is hitting new highs against a strong dollar, when the dollar does weaken gold will fly up even from here!
