Can anyone save the dollar? The sun may come out tomorrow but is anybody betting their bottom dollar that the dollar may find a bottom tomorrow? Come what may, the dollar has been the major influence on the petroleum prices and yesterday, if only for a moment, the dollar took a backseat to a wildly bearish Energy Information Agency oil inventory report. Still with the dollar talking another drubbing overnight the question is, can anyone save the dollar?
Well they may try. Yesterday Russia and China were reportedly buying dollars. Overnight Dow Jones News reported that the sinking dollar prompted a wave foreign exchange intervention by central banks in South Korea, Taiwan, the Philippines and Thailand seeking to limit damage to their export industries. Still half hearted intervention measures may only add to the dollars bearishness. Intervention rarely works over the long term and if it is to have a chance, we may need to see a coordinated global effort. In the mean time with strong economic data coming out of Australia and Germany it is putting even more pressure on the beleaguered dollar. One can only wonder how high oil might have gone if it were not for the bearish inventory numbers.
Remember last week when everyone just seemed giddy about gasoline demand? Well that was last week and last week is gone. How about this week? This week the market was slapped down by an unusual unseasonable build in gasoline supply. The EIA reported that total motor gasoline inventories increased by 2.9 million barrels last week. That is not supposed to be happening at this time of year and really knocked the complex for a loop. As for crude oil we are swimming in it. In data compiled from the EIA from Barbara Powell at Bloomberg she points out that crude supply that currently stands at 337.4 million barrels. That is 10.1% higher than the fiver year average. Gasoline supply is 6.9% higher that the five year average and distillates a whopping 30.1% higher than the five year average. These figures represent what can only be described as a glut. And if it isn't a glut it is the closet thing we have had to a glut in the last five years.
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