ForexInfoCenter

05/11/2008 - Oil keeps moving higher, threatening growth, inflation

Posted by FOREX.com's Weekly Strategy in May 9th 2008  
* Oil keeps moving higher, threatening growth, inflation
* Eurozone finance ministers meet next week
* Risk aversion comes back with a bang
* Key data and events to watch next week

Oil prices gained nearly 8% this week after a US investment house issued a report suggesting a 'super-spike' might be unfolding that could eventually see prices rise into the $150-200/bbl range. Rebel attacks in Nigeria, which temporarily disrupted crude exports, conveniently served as a nice background accompaniment to the steady grind higher in oil. Interestingly, the surge in oil defied a larger than expected weekly US inventory increase (5.6 mio bbls vs. forecast of 1.6 mio bbls), suggesting that market speculation rather than any demand constraint is actually behind the move. This makes the recent advance generally suspect and there is a lot of talk that the rally is overdone. But there are no imminent signs of a reversal, though momentum studies are overbought and currently showing a bearish divergence, suggesting potential for a reversal lower. While oil prices continue to move higher, global growth is going to be undermined and consumer sentiment will continue to deteriorate.  Full text »

digg this! | del.icio.us | Technorati | Stumble It! Read More...

Filed under: Weekly Strategy