Oil Flirts With $90
I feel like I am watching a car wreck in slow-motion:
NEW YORK (CNNMoney.com) — Oil prices pushed into record territory Thursday, finishing at an all-time high above $89 a barrel, helped by a further decline in the dollar and fears about supply disruptions. Light, sweet crude for the November contract jumped $2.07 to settle at $89.47 a barrel on the New York Mercantile Exchange, shattering the previous record of $87.61 a barrel reached two days earlier.
Helping to lift crude prices higher was a decline in the dollar, which fell to an all-time low versus the euro and also dipped versus the yen. Since oil is priced in dollars, a declining greenback makes oil less expensive for consumers outside the United States, encouraging more consumption.
If Turkey invades Iraq within the next week, that may do it. On the other hand, that is probably already factored into the price, so it might take news of a different sort. At this point, though, it’s just under 12% away from $100. But I still feel like we are very near a top – at least for now. Again, I would not be a buyer at $90.
However, I think this is setting up a very nasty gas price shock – especially with gasoline inventories still near record low levels.