Oil Prices Higher on Mid East Unrest and Commodity Speculators
The speculative rush into commodities is in full force again U.S. WTI crude futures rose more than 2 percent to settle at their highest level in 30 months. A combination of a soft US dollar from an ECB rate rise and further threats to America’s political relevance with a government shutdown within hours of being implemented caused Gold to new all time highs and the dollar index lower.
Oil gained from this and continued fighting in Libya and concerns over the Nigerian elections. On the New York Mercantile Exchange WTI crude for May delivery settled at $112.79 a barrel, the highest since Sept. 22, 2008. Back then front-month prices closed at $120.92. Just this week May WTI rose $4.32, or 3.98 percent. This was the third straight week up for oil prices.
Photo by BarrybarBrent crude futures prices also extended gains to a 2-1/2-year peak above $125 a barrel. Brent prices were the highest since September 2008. Brent has recovered after falling below $108 after Japan’s March 11 earthquake and tsunami.
Geopolitical supply risks are touted but in all reality the easy liquidity from the Fed and the Fed and Obama’s unconcern over high oil prices has sent the price higher.
This is in the face of a collapsed US economy, Europe debt crisis, tightening in China and demand destruction in Japan. The U.S. manufacturing sector grew at a slower level in March with prices paid at their highest level since July 2008 according to the ISM manufacturing index last week.
We seem to have a reached a dangerous place for oil prices, most likely forcing the death knell to the US economy if not the global economy. Gasoline is over $4 a gallon and $10 a gallon in Europe. Food prices are set to rise as a result. The US government, Fed and energy authorities s have sat idly by despite the obvious risks to the economy. Unless we can get back under $100 a gallon very soon the damge in real terms in consumer confidence will put any recovery gains on hold.