The day after crude oil prices rose almost 5% the dogma of the dollar versus oil inverse relationship has come to a screeching halt ahead of the most exciting FOMC meetings in a decade. As the Fed moves closer to raising interest rates and getting closer to a normalization of interest rate policy the correlation between the dollar and oil is breaking down.
http://admin.futuresmag.com/admin/structure/nodequeueHedge funds are not listening to crazy bearish crude oil price predictions like Goldman's $20 a barrel call and instead are amassing its biggest net long position since last April. Oil fund managers are not betting on $20 a barrel oil this week because they increased their net-long position by 16,855 contracts to 132,857 futures and options in the week ending Sept. 8, according to the CFTC commitment of traders report.
Crude oil prices led stocks lower yesterday, but today are rebounding. There’s talk of lower U.S. output, stronger than expected demand in Asia and short covering ahead of the weekly inventory reports.
Respected economist and historian and the editor of the ‘Gloom, Boom & Doom Report’ Marc Faber warned on Bloomberg TV’s Market Makers yesterday that there are now “no safe assets” including deposits and said that he is focusing “on precious metals.”
Crude oil prices are proving to be resilient after wiping out a 2% loss to close over 2% higher. Not even a reported 4.7 million increase in crude supply and reports that President Obama has the votes to overcome a veto on his deal to lift sanction on Iran was not enough to keep this market down.
In the aftermath of the biggest point drop opening in the history of the stock market open, crude oil today is battling back. As European and U.S. stock markets even as china and Japan markets fall the crude market is trying to make a run higher and get out of the $30 per barrel handle danger zone.
Crude oil prices fell below $40 a barrel signaling that not all is well with the global economy. In a global equity market rout, fear trading has taken hold as traders run to the safe haven of bonds and run from just about everything else.