With one full day into the New Year, the price of oil didn’t wait long before moving into record territory. Oil kissed the $100 mark today in intraday trade as futures surged more than $4 dollars.
Here’s what driving the markets.
It’s part supply, part demand, and part political tension. And as always the dollar is involved.
From AP entitled: Oil Futures Rise to $100 a Barrel
"Oil prices soared to $100 a barrel Wednesday for the first time ever, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will continue to outstrip supplies.
Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher.
Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria’s oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains, as did a report that OPEC may not be able to meet its share of global oil demand by 2024."
That move capped off a run in crude that began to gather steam on New Year’s Eve.
Take a look at the chart:
Meanwhile both gold and wheat also rallied as oil hit new heights and the U.S. Dollar stumbled.
First the price of gold:
And then the price of wheat:
And now the fading greenback:
Of course, all of these charts do have one thing in common. It’s all called inflation, and by year’s end it will be one of the biggest stories going.
Add to the that the dire supply situation and the never-ending geopolitical risks, and it all adds up to the same thing—much higher oil.
Happy New Year.