I think I'll attempt to get this thread buzzing about the SPR news and crude oil in general.
FWIW, judging by today's action, whereby oil is down less than 5%, it looks like the release is going to be a total waste. If they cannot drive crude to the mid-$20's, which is undoubtedly their intent, then the release will have been in vain. Still, it may be too early for such an observation. Maybe the release will soon yield a couple of weeks of data showing increased inventories. That should drive down the price.
But what if crude prices wont go down? Then it would no longer be a question of supply and demand, but rather a question as to the diminished purchasing power of paper currencies. The only way to judge whether currencies are weakening worldwide (putting aside one currency's strength vs. another for a moment) is to watch global commodity prices. If global commodity prices rise or stay flat in the face of increased supply, then no other conclusion can be reached.
As for the Dollar, Technical Analyst Kevin Klombies, publisher of IMRA (Inter-Market Relationship Analysis), has shown that there is a remarkable correlation between cotton futures and the Dollar. His studies show that historically, troughs in cotton tend to inversely forewarn of peaks in the Dollar by a lead time of one to 3 months. Cotton appears to be launching off of a bottom on monthly charts, while the dollar, as we know, has been at a climactic peak.
Klombies' site is krk-imra.com and docs are avail on MultexNet or Multex via Bloomberg. |
