Why would the price of crude oil spike higher when demand for petroleum products has fallen?
Today's Fed rate cuts have undercut the value of the US Dollar, sending it plunging lower. Thus, crude oil prices must rise to compensate. These two charts, showing the spike in the price of oil, and the off-setting plunge in the value of the USD, occurred simultaneously with the Fed rate announcement today.
Following the Fed rate announcement, within minutes, the US Dollar Index futures have spiked downward to within just 1 tick of an all-time low (see chart of US Dollar Index futures at right). If it continues -- and there is no reason to think it won't -- commodity prices will likely surge again, just as oil and gold have in the minutes following the announcement.
Wednesday, January 30, 2008
Crude Oil Spikes Higher! USD plummets!
