Wednesday, September 12, 2007

If it keeps going up, rates will have to rise eventually.

Oil Rises to Record $80.18 on Larger-Than-Expected Supply Drop

If prices can be this high with not much happening and OPEC offering 500,000 barrels a day, then I honestly believe that a major supply shock would send prices to £100+ It took Katrina to get it not this high before, we are in uncharted territory.

Posted by planning4acrash @ 11:43 PM (578 views)
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4 thoughts on “If it keeps going up, rates will have to rise eventually.

  • anything to do with the cheapening of money aswell?

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  • And we still have a couple of months of the hurricane season to come…

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  • If the Fed cuts rates, this will devalue the Dollar which will have the effect of reducing oil prices as oil is often priced in Dollars which may ease inflation a bit. however if the BoE
    reduces rates as I think they will do in the short term this will counteract this effect.

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  • dbnazz1…I could be off the mark here, but isn’t it the case that whilst oil is often priced in dollars, much of it actually comes from countries/companies outside the US (e.g. OPEC) who are going to want to “earn” the same amount of, e.g. Iranian Rials, for each barrel as they are getting now. So if the dollar/rial exchange rate drops, the price in dollars will have to be higher, not lower, to get the same amount of rials? In which case the price of oil in dollars is somewhat of a red herring without also comparing the exchange rate (oil at $100 a barrel will be fine for us Brits if the exchange rate changes to $4 to the pound!).

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