Oil prices and natural gas prices shot higher on Wednesday, as traders reacted to a slew of positive economic news that earnestly suggested some genuine improvement, ultimately, in final demand. While the news helped out stock markets, the DJIA only gained 30.69 points. The US dollar started out the day stronger, but it sold off later in the day, finally breaking support. The interesting part was that currencies and equities were reacting to the same news and factors that oil prices were – rather than it being a case of oil prices rising on liquidity-oriented moves in equities and currencies. [More]

The imminent arrival of Thanksgiving seems to have kept traders in a defensive posture yesterday, and this natural reticence was reinforced by a lack of fresh news or movement by equities or currencies. Gross Domestic Product in the third quarter was revised down from an initial estimate of 3.5% higher to 2.8% higher, which was in line with estimates which expected a revision to a gain of 2.7%. This was already in the market, to a large extent. The absence of fresh moves (higher) in equities or (lower) in the dollar allowed oil prices to follow their fundamentals yesterday. [More]

James Bullard (President of the St Louis Federal Reserve Bank) was at it again, talking on Sunday about how the US Federal Reserve may decide to buy mortgage-backed securities beyond the existing cutoff date in an effort to provide the Fed with flexibility in its efforts to keep the economy moving towards full recovery. These comments, like the ones made last week, were seen as a sign that the US may maintain low interest rates and a devotion to liquidity well beyond what has commonly been accepted as the likely end of the existing cheap money period. [More]

The oil complex was mostly lower on Friday, although gasoline prices finished higher. The December crude oil contract expired on Friday and there seemed to be some late short-covering by traders that had waited until the very end to buy back contracts. The US dollar was higher on Friday and equities were slightly lower. These factors worked together to press oil prices lower. [More]

Disappointment gripped oil futures and stock indices yesterday as investors reacted to the mild gains seen in both on Wednesday. Federal Reserve Bank of St Louis President James Bullard had startled markets by predicting that the Fed could keep interest rates near zero until 2012, and many felt that his comments should have generated much stronger buying interest in both equities and futures on Wednesday. The fact that this buying had not materialized left investors wondering what might be needed to trigger new highs in both markets – which were very near recent highs when the comments were made. Oil futures had the additional benefit of declines across the board in inventories and refinery utilization. [More]

Federal Reserve Bank of St Louis President James Bullard shocked currency traders by telling reporters yesterday that the Fed could keep interest rates near zero until 2012. Observers noted that Bullard is not a voting member of the FOMC this year, but the effect on currency markets was sudden and severe. Traders bought other currencies aggressively against the greenback – but the dollar still held above its major support at its double bottom. While the promise (threat?) of low interest rates for another two full years pushed the dollar lower, it did not have its traditional impact (to send prices higher) in equities. [More]

So, yesterday, the dollar rebounded reasonably well. That should have opened the door for the oil market’s fundamentals on two different levels. The first was just the blind, knee-jerk, one-day-at-a-time, headline-following reaction. The dollar was steady to stronger, so oil should have dropped. The second reason was longer-term; by rallying yesterday, the dollar gave fresh support to the double bottom it formed late last week and it took back most of the losses seen on Friday and Monday. If the dollar is firming or has found a bottom, the reason for strength in oil prices comes from elsewhere. [More]

Fed Chairman Ben Bernanke reiterated that interest rates will remain low for an extended period well into the future. This pushed the dollar lower initially, although it rallied later in the day. The DJIA soared to new highs for the year and gold reached new, all-time highs, and oil prices backed away from fundamentals and joined in the low interest rate frenzy. Even though the dollar held remarkably steady against the euro, the talk was all about its weakness and the likelihood that it will remain weak. Once again, the so-called “appetite” for risk seemed to border on mindless gluttony. [More]

Gold prices were higher on Friday, and the US dollar ended lower. But, while the weak greenback helped precious metals, the luster was off oil. The strength of the dollar on Thursday, along with the possible double bottom formation, gave fundamental oil traders a chance to push quotes lower after the DOE report was released. Friday’s decline in the dollar was not enough to negate the double bottom and it took back only half of Thursday’s gains. More than anything, it did not negate the bearish factors in last week’s DOE statistics. [More]

The US dollar advanced sharply yesterday, and it looks like we may have a double bottom forming. Prices found support near the lower end of their range, and they bounced significantly higher in heavy trading yesterday. Despite a drop in the most recent unemployment figures, investors expressed doubts over the ability of the global economy to sustain a major recovery. The result of this was a massive move out of commodities and stocks and back into the US dollar. Because it was so unexpected, many traders were caught leaning the wrong way and were forced to cover. [More]