Crude Oil Hits
Ceiling in Week as Hedge Funds Attack Euro
Oil Market Summary for 02/22/2010 to 02/26/2010
Crude oil broke through the $80 a barrel ceiling repeatedly
during the week but kept falling back as hedge funds placed big bets on the
Euro’s decline.
The fiscal drama in Greece held global markets hostage much
of the week as worries about the impact of the Greek crisis on the euro
outweighed comments from Federal Reserve chairman Ben Bernanke about continued
low interest rates in the U.S., pushing the euro down against the dollar and
damping crude prices.
The euro recovered some ground on Friday amid new reports of
European aid for
Greece
after falling to a nine-month low of $1.3440 on Thursday.
Germany’s
state-owned bank KfW may take part in a planned Greek bond offering next week,
according to market reports.
The Wall Street Journal reported on Friday that a small
group of elite hedge fund traders have concluded that the euro could be headed
to parity with the dollar and their bearish bets are increasing the downward
pressure on the 16-nation currency.
The Journal compared the situation to the hedge fund attack
on the dollar in 2008. However, the trades are not expected to lead to a
collapse of the currency as the attacks of George Soros on the British pound
did in 1992, the paper said.
Positive
U.S.
economic data on Friday, including a revised fourth-quarter GDP annual growth
rate of 5.9%, help crude oil futures claw back some of
Thursday’s losses and near the $80 threshold again. Nymex’s benchmark West
Texas Intermediate settled at $79.66 on Friday, after topping $80 earlier in
the week.
In spite of crude’s difficulties in staying above $80, some
analysts issued bullish prognoses for energy futures. Goldman Sachs forecast a
new trading range of $85 to $95, up from the $70 to $80 of the past several
months, amid supply disruptions from the North Sea and Venezuela and the impact
of the Total refinery strike, which was resolved earlier this week.
Other analysts, too, looked for fundamental supply and
demand considerations to reassert themselves amid the currency turmoil and liftcrude oil futures
into a higher trading range. Oil futures prices gained more than 9% in February
but remained below January’s highs.
-----------------------
Darrell Delamaide writes for OilPrice.com and focuses on Fossil
Fuels, Alternative Energy, Metals, Crude Oil Price and Geopolitics. To find out
more visit their website at: http://www.oilprice.com.
