Bloomberg: Crude Oil Has Biggest Gain Ever as Dollar Drops Against Euro

[featherman]

" Sept. 22 (Bloomberg) -- Crude oil climbed more than $24 a barrel, the biggest gain ever, as the dollar weakened the most against the euro since January 2001, boosting the appeal of commodities as a hedge.

Oil, gold, corn and other commodities climbed as the dollar dropped on concern that a U.S. proposal to buy $700 billion of troubled assets from financial firms will deepen the budget deficit. Oil has risen 41 percent since Sept. 16 as lawmakers pledged fast consideration of the Treasury's plan to buy devalued mortgage-related securities.

``Gold, silver, oil, copper, just about any hard asset, is looking good at this point,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``With the dollar down and stocks getting hit, commodities look like a safe play.''

Crude oil for October delivery rose $23.95, or 23 percent, to $128.50 a barrel at 2:23 p.m. on the New York Mercantile Exchange. Futures climbed as much as $24.33 to $128.88 a barrel, the highest since Aug. 28. "

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.ugPXZ5Y00w&refer=home

[babylonsister]

1. Gulp. Please, can someone justify a $24/barrel leap in price, in one day?

How can that be explained? How will this affect heating prices, prices at the pump, airlines, trucks that deliver goods, etc.?

[phantom power]

5. It's a response to weak dollar...

you may have heard people say that these bailouts would weaken the credibility of our financial system. This is the kind of thing they were talking about. Reduced credibility of our currency.

[Javaman]

9. There was an article over the last couple days on how the bailout will crush the dollar...

I guess this is the previews.

[kenny blankenship]

8. It's really more a measure of a loss of value and confidence in the US dollar

than anything intrinsic to the oil mkt. like global supply and demand -except that the US dollar is intrinsic to the oil mkt.

Oil is priced in US dollars, even though it comes out of the ground somewhere else. When something catastrophic happens to the US dollar - such as the announcement of a bailout plan of Biblical proportions, bringing the total of borrowed bailout bucks for the year up to approx. one trillion dollars, you will see a large movement down in the value of the dollar, reflecting the expectation of inflation, and you will see a correspondingly large move up in commodities priced in dollars. Because oil is linked to the dollar, when the dollar goes down, oil goes up.

How will this affect heating prices, etc? Obviously all those things will go up in cost, and that will ripple out and drive up practically everything else that makes up the cost of living and the cost of doing business in the real economy. That's the cost to every American of Wall Street's reckless leverage games: they place a bad bet, run a scam too long, push on the limit a little too hard, and suddenly they can't pay each other off. And then suddenly everyone else in the country gets asked to pay for those mistakes. Treasuries are printed to reinflate the collapsed bubble on Wall St., and you'll pay in taxes for those extra debt obligations issued by the U.S. Government. And you'll also pay for this additional debt through the inflation of prices for everything you buy that requires transportation, fertilizer, packaging---pretty much everything. And as you can see, the inflationary consequences of the bailout don't even wait for the ink to dry before they begin to impact you.

[Festivito]

11. The CONs know how to CONTROL the price of oil. Up for BAILOUT.

They can use a sudden rise to make scarier top-of-the-hour headlines after letting it go down for several weeks. Remember speculation. Suddenly it's come back just when THEY needed it most.

HAVE TO VOTE FOR THAT BAILOUT! :sarcasm:



I say screw 'em.

[BrklynLiberal]

2. So $200 bbl by the end of the year is still a possiblity...

:wow:

[louis-t]

3. "Concern" about budget deficit?

Sounds more like 'mission accomplished'. Can't have oil below $100 now can we?

[thewiseguy]

4. They need to suspend trading on oil for the day. This is just insane.

[Hubert Flottz]

6. This is how Wall Street says thanks for the bail out to the folks

who DO pay their taxes.

[Andy823]

7. They are nothing more than

A bunch of greed bastards who need to be put under control! This is insane! Looks to me like some rich assholes are trying to make a killing on the cheap oil they bought last week. I hope this comes back and bites them in the butt, and they lose big time!

I say to hell with them and the bailout! I can't believe the kinds of things that have happened to the markets since Bush took over. If this doesn't open he eyes of republicans, I don't know what will!

[whosinpower]

10. If the bailout goes through

Watch oil skyrocket. I am no economist, but this makes sense to me - if you flood the market with US dollars to buy worthless crap - those dollars become worthless crap - and oil will compensate for the falling US dollar accordingly.