Oil Crosses Above $93 A Barrel, $100 Next?
Oil futures today crossed the $93 a barrel mark and finished the day at $93.53. Crude prices are apparently closing in on all time highs adjusted for inflation. In early 1980 the $38 barrel of oil would be worth anywhere from $96 to $100 today.
So what keeps driving oil prices up? Two simple reasons amongst many others:
- Mexico halted some 600,000 barrels a day of production due to weather on Sunday. This is temporary and should be back to average by later this week.
- A weak dollar causes investors to seek oil as an alternative investment. The US dollar today dropped to $1.44 per euro which is the weakest since January 1999.
Now, the Federal Reserve meets again this Wednesday and are expected to drop interest rates again a quarter point. This will only put more pressure on the US dollar. Also, Wednesday an inventory report is due out from the Energy Department, which if sour could very well send crude even higher.
For those who wish to invest in the commodity check out my post titled 13 great ways to invest in oil without buying barrels. For those who just wish to keep buying gas at the pump and driving their SUVs, know that the price at the pump has risen $.10 over the last two weeks on average nation wide.
Crude oil is up 10% since last week, and is up 16% on the month as a whole.
Once oil hits $100, I’ll short the OIH or purchase some puts. I can’t see oil going too much higher than $100 without some sort of crisis.
$100 oil will be interesting. If the US ever bombs Iran we’ll see $200 oil. I am currently fighting the urge to blow some money on way out of the money oil options.
I think that $100 is becoming a foregone conclusion at this point. I would think that after it touches $100 might pull back if for no reason other than the psychological effect.
Guys – oil fell below $93 in Europe during trading. I think it’s at around $92.42 – it looks like the Pemex supply disruption may not be as extended as they initially thought.