The chart of the dollar and oil continue to move in opposite directions.
The market for the US Dollar is far bigger than the oil market. Therefore,we believe that the dollar dog is wagging the oil tail. It is the dollar that is determining the direction for oil at this time.
Just as in November - when the dollar was in ascent and the Saudi’s talked the price of oil into a free fall – the same thing can happen now in the oppositedirection.
With the dollar in a decline mode, if there is an outside reason for oil to spike – this spike can get exaggerated to the upside.
What are the possible outside reasons for oil to spike –
1) Continued instability in the middle ease.
2) A sharp decline in US production month over month.
3) Opec agreeing to maintain quotas as world demand continues to increase.
4) A surprise increase in the global economy
We don’t know if any of these things will happen, but it seems that there
are a lot of things that can happen to drive oil higher.
Over
