First GM , now moving commodity markets? Government’s been busy.
At the start of this week gasoline prices averaged $2.691, up 31% since the end of April. Thus, the recent decline in demand inelasticity might indeed be short-lived.
In the meantime, crude oil shot higher yesterday as the dollar tanked, as illustrated in today’s issue of The Schork Report.
Overnight weakness in the dollar eased in morning trading yesterday. However, in the ten-minute bar at noon, the bottom fell out from underneath the market. Crude oil bulls apparently took that as their cue to pile into WTI… and pile in they did.
Today we will get the Fed’s policy statement per the FOMC with regard to short term rates. Market consensus expects the Fed to “… put a damper…” on the prospects of a rate increase by the end of the year. Thus, Monday’s dollar strength, which was ignited by the World Bank’s downgrade of the global economic recovery, gave way yesterday to prospects that rhetoric from the Fed will spell weakness for the dollar.
As such, the dollar tanked (sell the rumor, buy the…?) yesterday and crude oil moved accordingly. Thus, as far as today goes, traders will looking to the Fed, rather than the DOE to ascertain crude oil’s path. How pathetic is that?
Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.