Dollar Down; Crude Up And Greenspan States The Obvious!

By: Mike Campbell
The US Dollar closed at 1.4473 to the Euro; its lowest level this year. Crude oil is priced in US Dollars, so there is an air of inevitability about it that the price of crude would be heading in the opposite direction. Sure enough, the price of light sweet crude futures for October delivery rose to $71.12 up by $3.10. The rise comes ahead of a summit of OPEC countries to be held in the Austrian capital, Vienna later today. Whilst the belief that the world economy may be starting to emerge from recession and consequently demand for oil may grow is partially responsible for the price hike, much of the rise is due to the declining Greenback.

Saudi Arabia is a major oil producer and the country’s oil minister, Ali Al-Naimi was quoted in the Saudi press as stating that Saudi Arabia did not expect any change in OPEC’s supply policy at the meeting, describing the current prices as “satisfactory”. Some pressure is to be expected from the Iranian and Venezuelan delegates urging further rises in price or output, but this is likely to be resisted. The American Petroleum Institute is due to release data on the US crude stockpile whilst the OPEC meeting is in session; the volume of US reserves can also influence crude prices, with large inventories putting downward pressure on the price.

Speaking on a BBC TV programme, The Love of Money, former US Federal Reserve Chairman, Alan Greenspan, predicted that the world will suffer another financial crisis. Given the cyclical nature of markets and their history, this was hardly an earth shattering revelation. Greenspan went on to explain that the next crash would follow a long period of prosperity and that it would be triggered by “human nature”. Reassuringly, the octogenarian went on to predict that the world would “get through it,” but then again it always has. Greenspan noted that these events tend to arise about once in a century, so prudent investors take note!