Weak Dollar Central to Oil Price Boom

By Reuters, 26 Sep 2007

The weak dollar's leading role in oil's ascent to record highs is partly due to a tide of financial flows into commodity investments but also reflects a shift in the greenback's relationship with crude.

Haraz N. Ghanbari / AP

The dollar has traditionally influenced the price of oil and other commodities, including gold and base metals, which are mostly priced in the currency and usually move to compensate for changes in the its value.

So the steep fall in the dollar to record lows against the euro, for example, has helped drive oil to a record of $83.90 a barrel, reached on Sept. 20.

"I'm certainly in the camp of dollar weakness driving crude strength," said Anatol Feygin, head of global commodity strategy at Bank of America.  "With growing OECD inventories, revised lower demand, increased OPEC production and a relatively mild hurricane season, the dollar seems to be much more the issue."

That, analysts say, is because one aspect of its longstanding relationship with oil is Changing.

In the past, dollars earned by oil producers flowed into U.S. dollar assets or investments.

The Gulf countries are thought to hold around $3.5 trillion in total dollar reserves, according to Lehman Brothers research.

But investors say the proceeds from the current oil boom -- petrodollars -- have not gone to support the U.S. currency.   "The petrodollars which historically got invested back in the U.S. in dollar-denominated investments now have more options back home or in emerging markets or the euro," said Badung Tariono, who manages an energy fund for ABN AMRO.

"The relative stability of the euro and good opportunities in the rest of the world play a large part as well," he said. The Qatari-backed investment fund Delta Two, for example, is in talks to buy British food retailer J Sainsbury for about 10.6 billion pounds ($21.34 billion).  The Quatar Investment Authority is vying with Borse Dubai and Nasdaq to buy Nordic exchange OMX.

Oil Prices Could Rise Further

"After a generation on the sidelines, the dollar has re-emerged as an upside risk to oil prices," Lehman Brothers said in a research note.  An influx of hedge funds, banks and other financial institutions into the commodity markets in the past few years has also had an impact on oil/dollar moves, analysts say.

"You have more financial players today that are trading oil and commodities and they will play more of those micro-relationships," said Olivier Jakob of oil consultancy Petromatrix.  "If you are bearish the dollar you can sell the dollar index or buy oil and gold or commodities to diversify your portfolio," he said.

The dollar index, a tradeable instrument which tracks its move versus a basket of six currencies, is close to record lows.

Commodities have moved into the spotlight as an asset class because of a price boom but also because they behave differently from stocks and bonds and so offer diversification.  Long-only money invested in commodities indexes, for example, reached $120 billion by the second quarter of 2007, a 50 percent increase on the same point in 2006, according to statistics from AIG Financial Products.

Turbulence in equity and debt markets caused by banks drawing in their horns because of bad loans in the U.S. mortgage sector has played a part in attracting money into oil.  "Crude oil has benefited from funds diverted from elsewhere during the recent financial market uncertainty," Helen Henton, head of commodity research at Standard Chartered, wrote in a research note."
 

-The Fed has created this Disaster, & the Administration is also to blame.  

Uglydog, I don't doubt for one minute that most of what you have say here is the stark realtity of life in the USA; what was once the greatest country in the world is now reduced to a mere shadow of what it once was and what is stood for is a memory.  For some reason we have been taught/brainwashed from the day we are born that we are to fear the US government and need to jump through all sorts of hoops to get what we are entitled to. We even need to hire attorneys to receive compensation we have paid for in insurance premiums. Some here can't even get homeowners because they own GSD's and now many states and townships are talking about requiring microchipping and DNA identifcation of every single dog whelped here. The powers that be are not happy with only knowing where we live, what we eat, where we shop, they also want to use our hobbies to keep an even closer track of our activities. This country truly is in a very troubling state and January 20, 2009 cannot come fast enough for me. Hope springs eternal with me, I have to think the a new adminstration will put us on the road to recovery and off the road to perdition.

Having said that, honestly your posts turn this board into one of the most depressing places to be on the entire internet.  It's not only what you have to say, it's the responses that follow. Yeah, I know I could just skip over them and I usually do, but sometimes it's like watching a train wreck knowing what's coming but not being able to turn away. I'm here to read about GSD's, not how my family and I will probably be eating out of dumpsters in 5 years or less due to the rising price of gas. I'm certainly not suggesting that we, the people, ignore the policital manipulation, I'm merely suggesting that it might not be appropriate to hash it over ad nauseum on a dog board, If I have a toothache I go to the dentist, when I want to be depressed, I read one of your posts and I really don't think that is your intent.

Anyway, hope you had a nice Easter, all of you. I'm going to the medicine cabinet a prozac.

Sorry Blitzen...we are in for a Fight, literally & figuratively, hope youre ready.  I only point out the obvious but Ill cease to if that makes you happy.  I just get tired of being bombarded by the "Super Patriots" with their $2 made in Taiwan- Support the troops stickers  & the War Pimps when we are under such attack at home..and by design.  

So Ill leave you with something I saw today & keep it strictly to dogs.  And Happy Easter to ou & others here by the way..

 Chris Albrecht
March 18, 2008

Comcast Cameras to Start Watching You?

If you have some tinfoil handy, now might be a good time to fashion a hat. At the Digital Living Room conference today, Gerard Kunkel, Comcast’s senior VP of user experience, told me the cable company is experimenting with different camera technologies built into devices so it can know who’s in your living room.

The idea being that if you turn on your cable box, it recognizes you and pulls up shows already in your profile or makes recommendations. If parents are watching TV with their children, for example, parental controls could appear to block certain content from appearing on the screen. Kunkel also said this type of monitoring is the “holy grail” because it could help serve up specifically tailored ads. Yikes. (Sure)

Kunkel said the system wouldn’t be based on facial recognition, so there wouldn’t be a picture of you on file (we hope). Instead, it would distinguish between different members of your household by recognizing body forms. He stressed that the system is still in the experimental phase, that there hasn’t been consumer testing, and that any rollout “must add value” to the viewing experience beyond serving ads.

Perhaps I’ve seen Enemy of the State too many times, or perhaps I’m just naive about the depths to which Comcast currently tracks my every move. I can’t trust Comcast with BitTorrent, so why should I trust them with my must-be-kept-secret, DVR-clogging addiction to Keeping Up with the Kardashians?

Kunkel also spoke on camera with me about fixing bad Comcast user experiences, the ongoing BitTorrent battle and VOD. But he mostly towed the corporate line on these issues (the monitoring your living room came up after my camera was put away)."

-I think Ill just use the internet for entertainment & Forego the Govt watching to see whos in my room

I mean really, yall who are reading this thread have to be able to think for yo selves right ?  Sooooo, I wanna know just what exactly you thinking people think our founding father ment by this when he decided to say it ???

When the government fears the people, there is liberty.  When the people fear the government, there is tyranny. ~ Thomas Jefferson (1743-1826)

Because really even this comment alone is the backbone to the United States Constitution. Or am I understanding it wrong ? Can someone please correct my stupid......

BabyE, yes, you have it right.  But remember, most folks don't know the Constitution of BORs and as long as they have full stomaches they see no need to get active politically to elect politicvians who are Constitutional?BORs maintainers rather than sold out to globalism.   Things will start to change if the dollars sinks low enough and the masses start to go hungry.

And most of the culture which maintained our Constitutional and BORs value systems has been eroded by the large number of immigrabnts who really aren't acculturated in this.  Yes, this "maintaining culture" has been eroded and is being destroyed before our very eyes. 

 Speaknow,

Thank you for your message, some of which I agree with. I especially agree that the organizations SHOULD tighten up the rules and sanction people who break the rules. The trouble is, like in many situations, they do not, and will not, also making the excuse that it is not in their purview. Further, they are lead all too often by people who are often also unethical. Real change, on many fronts, comes best from the ground up and further, is also best monitored by people on the ground levels. 

I disagree that ethics are subjective. Honesty is honesty, regardless of venue. Stealing is stealing. I do agree that this matter of which we speak is a legal matter, but I also think that common sense has eluded many here, even though we all believe that people have a right to their day in court. I just don't think arrest warrants are regularly issued for people who have abided by contractual agreements. But we shall see and that is all I will say about it. There is a lot more to the story, and indeed, it is not particularly a nice story to realize once again that someone would risk their reputation and integrity for all the wrong reasons. 

As for being a lone crusader, I don't believe I am alone in this regard. There are many others here who also believe it is about time we all start cleaning up our own messes. Part of that cleanup project does, indeed, mean speaking out when things are not right, regardless of those who want to keep it all hidden under the covers. 

Finally, let me give you an example of a situation that I was personally involved in. Some years ago, I was called by the president of a local rescue group where I lived who knew I did GSD rescue. I was loosely associated with the organization and we helped each other as we could. The president felt that a man was neglecting his dog. Indeed, the county animal control officials had been called by the rescue group to go inspect the living conditions and the health of the dog. Though they felt the dog was clearly neglected, the dog has minimal shelter and water and an enclosure. They did nothing and did not warn or otherwise do anything about the dog. A few days later the man was jailed for something I don't recall. The president called me and asked me to go take the man's dog and hide it, despite the fact that she had found out from a neighbor that they would feed and water the dog. The president of the rescue group felt that the dog was neglected and that we should steal it and hide it from the man and when he found out and asked about it, if he asked the rescue group (that had been in fact trying to get him to relinquish the dog), that they say simply they knew nothing about it. So she called me first because the dog was a GSD. I was aware the dog had been seen by animal control, and in fact, I had actually also seen the dog. He was, in my opinion, neglected, but that is not against the law. I refused to take the dog. Why? Because it was stealing someone's possession. I could have and would have been rightly prosecuted for doing so. The rescue organization conned someone else into stealing the dog. I believed then and also now that this was an unethical action and in fact, was also a crime. After this incident, I distanced myself from the organization because it was clear to me that breaking the law was ok. In my opinion, it was not.

Thank you for your comments. I enjoy your posts and often agree, though I don't always post to say so.

Hodie and Speak, I agree with your good points.  Ethics require black and white honesty.  Either one obeys the law or one doesn't.  Taking something that isn't yours, even by deception, is still theft and in most cases the police will enforce the law.  If not one can go the civil court route.  But their is something fresh and healthy about estyablishing black and white clarity in ownership versus taking.  If one doesn't own something then they shouln't take it.  If a grey area of a contract, civil litigation is the answer.