Experts roundly agree that the recession is only a short-term blip in the long-term escalation of oil prices. And this time, there are 1.05 trillion reasons why oil is going to climb well past its peak last year.
In the energy market on Monday, crude for June delivery surged, closing at $59.03/barrel, up $2.69. June reformulated gasoline gained 7.75 cents, to $1.7581/gallon.
Barring some dramatic – and unforeseen – news this week, expect investors to tread water until Thursday, when the government is expected to release the results of the bank stress tests it conducted on the 19 largest U.S. banks.
How to leverage the lag time between commodity demand and supply into 183% gains. The quote is commonly attributed to architect Ludwig Mies van der Rohe, who certainly adopted the motto wholeheartedly. He and his fellow Minimalists, Walter Gropius and Le Corbusier, invented an entirely new style in which the most perfect home was an empty box, entirely devoid of furniture, or even occupants.
There is a full economic calendar this week, but all eyes will be on the two-day FOMC meeting and the rate decision on Wednesday.
It will be interesting to see how the FOMC approaches this meeting. The current Fed Funds target rate is 0-0.25%, which in and of itself is rather strange. It is a moving target, not a fixed rate. Who determines which rate is used? My guess is this meeting will be used to clarify what the rate is. The Fed will either officially reduce it to 0% in a continued effort to resuscitate the economy, or lock it in at 0.25%. This would at least leave the Fed with one perceived bullet in the gun.
The rest of the…
President Barack Obama’s $825 billion stimulus plan heads to the floor of the House of Representatives this week, with House Minority Leader John A. Boehner, R-Ohio, saying many in his party will vote against the package unless significant changes are made.
Who knew that oil, once the pariah of the western world, would have such a positive role in the Obama’ Administration. Senator Clinton couldn’t have asked for a better ally. Oil is bringing America’s strongest enemies to their knees and reminding Europe why Russia isn’t such a great neighbor after all.
It’s become apparent that Israel’s land war and Russia’s childish power plays aren’t driving gas prices up. In fact, the price of crude sank 6% to $38.00 a barrel this morning.
Oil prices have fallen 70% since hitting a record $147.27 a barrel in July, which means in just five months, crude has given up all the price gains it made in the past four years.
All eyes are on the oil futures market today. As governments and industries across the globe adjust for drastically lower oil prices, investors are anxious to see how the crude market will react to the growing conflict in the Mid-East.