Wednesday, June 10, 2009

Crude Oil at 7 Month High

Nymex July West Texas Intermediate oil rose $1.49 to $71.50 a barrel, its highest since early November. Meanwhile, ICE July Brent rose $1.24 to $70.86 a barrel.

WTI is up 60% since the first of the year.

Now, who is it that is concerned about deflation?


  1. Below the fold, today’s Financial Times reports that commodity trading heavyweights, “Glencore and Credit Suisse have created an index that allows investors to tap for the first time the views of the world's largest commodities trading house on raw materials prices.” Further, “The launch of the Glencore Active Index Strategy and several other Credit Suisse commodities funds comes as bankers report that big institutional investors such as pension funds are considering fresh investments in commodities after a hiatus of about a year.”

    The major investment houses are serious about reigniting the commodities boom as a safe haven from inflation.

  2. Wenzel,

    Can you explain to me how you're making a solid point here (about price inflation/deflation or monetary inflation/deflation, I wish you'd specify?) when oil hit a previous peak last summer in the midst of massive monetary (AND price?) deflation?

    So oil is up 60%, how much is housing down in the same period? And what about bonds? And before, housing and stocks were down while commodities rose.

    I'm not sure I get the point you're making. If I go to the supermarket and apples are up 200% in price but everything else is down 80%, is this inflation or deflation in your mind? Inflation of apples but deflation of anything else? So what is meaningful about that?

  3. @Taylor

    Given that the money supply is increasing, I fully expect price inflation to return, so I am looking at indicators, such as oil, that might indicate such.

    Granted they are not at all time highs, but if they are going to get to new all time high they have to trend up, first. So the key question is, "Is this just a bounce off a low or a new trend upward?" The longer it lasts and the more support you have from other indicators the more it likely to be a new trend upward, especially given the strong money supply growth.