Crude is hot and on the rise, there is nothing restraining the black bull at this second; despite some see fundamentals for oil weak at this time, yet to that is say, we are entering a new era of surging inflation and readjustments to economic measures. The crude has hit a fresh record of course enjoying its joyride, as is surpassed $103 levels.
Late yesterday oil reclaimed the upside trend to set its highest at $102.97 adding a total of $2.95 closing at a new high record close of $102.59 maxing it out after the lowest during the session was set at $98.91 per barrel. The main support provided was surely from the ever weakening dollar and Federal Reserve Chairman, Bernanke, providing the markets with further confirmation to the continuation to their easing policy, as to him stagflation is not an option at this time, while as implied futures now are starting to show the odds of a 75 bp cut in March by the Feds!
Meanwhile, incoming news of halting a key export line in Ecuador after a landslide punctured it, which pumps most of the oil extracted by Petroecuador in the Amazon jungle to ports on the Pacific Ocean; nevertheless, they said they will attempt to bypass the damage and use private pipeline, yet that still will force disruption to supplies from the region.
This provided enough additional support to an already surging barrel to set a fresh record this Asian morning at $103.05 even exceeding the inflation-adjusted record of $102.53 set in the 1980 after the Iranian revolution. As of 8:30GMT crude trimmed its earlier gains after the record to set the low at $102.39 and trading now near $102.70s up about 17 cents yell well steady above its new set ranges at $102 per barrel.
Surging prices came ahead of key developments on oil front next week; first on Saturday the U.N. is likely to take the vote on new third round sanctions on Iran over its nuclear agenda; while the next major event is the awaited Vienna OPEC meeting where they are to discuss tabled proposals of tightening oil production, which at this stage will be a high probability as the consumer nations are urging the organization not just to keep production intact, yet to add supply to the market to help ease surging prices.
Skyrocketing oil prices are much hammering to economies normally and specifically at this stage, as all nations are still suffering the aftermath of the subprime market collapse and the credit rout. The US is as well verging recession which will likely dampen demand heavily which is now seen the only downside pressure on prices which is overlooked currently as still fresh funds are pumped into the energy market for gains as the devastated dollar is still the major headline grabber. Adding to oil records we have seen fresh records across the board, the partnering commodity, gold, leaped near major resistance at $980s almost achieving its long term set target at $1000! While the single currency remains the everlasting start reaching as high at $1.5238 in early Asian trade this morning, while on the currencies front was the Japanese yen as well which took the dollar it almost a three-year low this morning.
Profit taking is surely to be seen today which will help oil close lower, meanwhile keep and eye on incoming data as the dollar is expected to weaken further today, while stricken oil ports remain on the spot; most importantly be ware of Saturday's UN decision as that might set crude to open the new week on a gapÃ¢â‚¬Â¦