Oil prices remain in the spotlight as they continue their seemingly inexorable rise to who knows how high. Indications of a price stall last week were quickly overwhelmed by a surprisingly large crude oil inventory drawdown, according to weekly US statistics, even as indicators of gasoline and oil demand have started to decline. The spillover effects into the broader consumer-led economy are only beginning to be felt, but announcements by airlines of additional fare increases and other charges to offset higher fuel costs suggest sky-high oil prices are beginning to affect corporate profitability and will continue to reverberate through major economies. At this point, oil prices need to see back below $130 trendline support to indicate a potential top, and losses below 127.90 to signal the start of a pullback. The USD continues to be affected by oil price gains, but not to the same extent as earlier this year. Still, on the margins, higher oil adds to pressure on the USD, while a stronger USD tends to cap oil price gains.  Full text »

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