Monday, December 14, 2009

The Meaning of the Crude Oil Break Below $70

Gold is not the only commodity in a new downtrend.

Crude-oil futures are for a ninth straight session today. If oil closes down on the day it will be the longest losing streak in eight years.

Crude for January delivery was last down 27 cents, or 0.4%, at $69.61 a barrel in North American electronic trading. It fell as much as 1.8%, to $68.59 a barrel, earlier.

If crude ends the session lower, the nine days of losses will be the longest such streak since July 2001.

The commodities break is signaling, in my view, the shrinking supply of dollars around the world. The dollar is again sitting on the throne, at least temporarily. Eventually most assets will be priced lower in terms of dollars, including stock prices.

1 comment:

  1. I read this elsewhere, and saved a copy for use as a signature phrase in my emails:
    "Because of all the bailouts, stimulus packages, giveaways and short-term debt, the U.S. has to finance nearly $5 trillion in 2010 alone. That’s about $96 billion in debt auctioned off each and every week."

    Good luck getting the primary buyers to continue buying that amount of debt.