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Oil prices trading lower on stronger US dollar, demand
Published on January 15, 2010 by oilprices · 2 CommentsOil prices are trading lower, below $79 a barrel Friday in Asia amid a strengthening US dollar and weak global crude oil demand from developed countries. US Light crude oil futures for February delivery was down 52 cents to $78.87 a barrel at late afternoon Singapore time in electronic trading on the NYMEX.
The euro fell to $1.4386 in Asian trading Friday from $1.4500 on Thursday. Investors often buy commodities such as oil as a hedge against inflation when the dollar weakens and sell when it strengthens.
Crude prices also fell on concerns demand from the US and Europe remains weak, however some analysts expect growth in oil demand from developing countries in 2010.
One of the biggest questions on the collective mind of the market is “Where are oil prices going?” Perhaps no other commodity impacts the global economy in as far reaching a manner as crude oil.
It’s estimated that just over 5% of the world’s oil tankers are being used as floating storage tanks by speculators who bought crude oil and are hoping to cash in on higher future prices. To say that the oil markets are an oil trading speculator’s playground might be an understatement.
Tags: demand, dollar, oil prices, trading, US
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Apparently the world is in the grip of the worst recession since the 1930′s, with consequent low oil demand amongst the developed countries in the OECD, and yet in Jan 2010 oil is trading at c. $80 per barrel! In addition, with depletion in conventional fields running at 6-7% pa, according to the IEA, the only source of replacing that lost capacity is expensive non-conventional oil like Canadian tar sands. All this means that when demand starts to grow, there is only one direction for prices – up.
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Agreed, but the question is how high are oil prices going to go this year?