Oil rises, as the Dollar Weakens over Euro

Oil rises, as the Dollar Weakens over Euro

On October 12, 2011 oil prices have taken a leap further by reaching $ 86 a barrel. This came along with a weaker dollar, and the persisting concerns regarding the debt crisis that is plaguing Europe. There was yet another spasrk to fire rendered by the International Energy Agency which lowered its demands.

The Wednesday afternoon saw witnessed the Benchmark crude that was up for November delivery, rising by 70 cents, and reaching a price of $86.51, as reported in the electronic trading exchange of the New York. The contracts settled at $85.81 a day before, in New York.

A recent report of unexpected inched up production in seventeen countries that use the same European currency led to an overtaking of dollar by euro. This further eased up concerns that had built up recently about the economy entering a phase of recession.

Moreover it is this weakening of the dollar that has resulted in the rise of commodity prices especially the oil which however became cheaper for investors with currencies other than dollar.

The recovering Libyan oil supplies have further created a comfortable position; experts from IEA opine though that the 2012 – supply-demand balance remains mainly unchanged. But it is this factor plus the betterment of the Eurozone crisis are two prime factors that are going to control the dynamics of the oil market, for the next 18 months to come.

Markets are also watching out for the earnings reports from corporate entities, as this shall reflect the direction of US economy and the demand for crude too.

Ritterbusch and Asoociates’ energy consultant says, "From a longer term perspective, we still see a choppy, wide swinging trade that still includes the possibility of a retest of last week's lows.” Investors are also expected to monitor information regarding the stock piles of crude in US.

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