Originally Posted by JGRaider


The falling US $$ is a major contributor to the increased price of crude. It has been stated many times here. Pure speculation, or flat out guessing that demand will increase is not a true supply and demand issue. Today we have 2.7% (app 3m/bbls) more crude than we had at this time last year. The price of crude on May 18, 2010 was in the neighborhood of $69. So let's see, more supply today, $30/bbl higher. Supply and demand is not a major contributor anymore.


OPEC still bases their crude pricing/exchange on the Dollar, I believe.

Crude prices versus Dollar to Euro valuation:

Dec 2008 (crude) $35.99 (Euro) �.78
Jun 2009 $67.68 �.70
Dec 2009 $71.75 �.66
Jun 2010 $75.09 �.82
Dec 2010 $89.43 �.76
May 2011 $117.12 �.67

As one can see their is no correlation between crude prices and the value of the dollar, at least in comparison to the Euro. In fact the dollar was stronger in relation to the Euro in Jun 2010 than it was in Dec 2008 and yet crude prices had more than doubled.

In fact the dollar was nearly the same against the British pound from the same time frame, Dec 2008 to Jun 2010. GBP .67 to GBP .68 and yet this was the time of the largest increase in crude prices.

Looking at another bellwether currency, the change in the Yen/Dollar rate between Dec 2008 and Jun 2010 only experienced a change of less than 3%, .93JPY to .91JPY.

Chinese Yuan? CY6.88 to CY6.83, again little change.

I just don't see the "falling dollar" as showing any effect on the price of crude. If we look back historically, the last time the dollar suffered a dramatic devaluation was in the mid 80's, specifically between 1985 and 1988. During that time the price of oil DROPPED from $26.92 to $14.87 for the same time period.

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