Oil Rising to $90.00 per barrel. OBAMA: Prices will necessarily skyrocket under my plan

Posted on November 9, 2010 by


Keep in mind that these prices are all PRE-CAP AND TRADE Energy Bill.  Obama is still pushing his Economy killing Green Legislation that will cripple America as he planned from as far back as  2006.

Now for the story that brought you to this page.
LONDON (Dow Jones)–Oil bulls’ imaginations were stoked last week after the Saudi oil minister announced the country’s comfort zone for crude-oil prices increased from $70-$80 per barrel to $70-$90 per barrel, setting a new psychological target for the market. But market fundamentals don’t support a $90-a-barrel price tag, oil analysts told Dow Jones Newswires.

“A $90/bbl price tag for oil is not justifiable. Oil is trading higher on QE2, but as has been seen today, as soon as the dollar bounces, oil stalls,” said VTB Capital’s vice president of commodities research, Andrey Kryuchenkov.

Last week oil futures soared on a weak dollar in the wake of the Fed’s announcement of further quantitative easing. Front-month December Nymex light, sweet crude hit a 25-month high of $87.49 a barrel in Asian trading Monday, within striking distance of the $90/Bbl level. Since then, however, prices have fallen as the return of concerns over European sovereign debt issues forced oil prices to retreat along with the euro.

“Oil has had a good run higher on upbeat sentiment but now investors are assessing how much the effects of quantitative easing have already been priced in because there’s been no real change in the fundamentals,” said Kryuchenkov.

Positive economic data out of the U.S. and strong demand from hotspots such as China promise to support high prices, however global supply remains plentiful and these fundamentals don’t provide enough support to justify hitting the $90 mark, said analysts.

Oil is currently being driven by macro events, in particular dollar movements, they said.

“The price is becoming more and more disconnected from the supply and demand balance,” said Hanson Westhouse oil and gas analyst David Hart. “Demand hasn’t fired up, supplies are plentiful and there is capacity to bring on more supply if needed. If oil makes a sharp move up the market would be very questionable, possibly forming a bubble,” he said.

Analysts warned that a further rise in the oil price would most likely be the result of increased speculation as the effects of quantitative easing, low interest rates and loose monetary policy create a wave of liquidity in the market.

“One of the reasons everyone is so upset with the Fed is that quantitative easing effectively juiced the market,” said CMC Markets analyst Michael Hewson. The increased liquidity has to go somewhere “and there is a concern that all the money could create a commodity bubble.”

Latest data from the Commodity Futures Trading Commission, covering the week ended Nov. 2, showed non-commercial investors increased their net long positions in crude-oil futures ahead of the Fed’s decision on quantitative easing last Wednesday. Money managers, including hedge funds held a net long position of 4,551 on the ICE Futures Europe Exchange, up from 2,961 the week before.