Oil hits high for 2009 as dollar plunges
03-19-2009, 09:10 AM
#1
Gets Weekends Off
Thread Starter
Joined APC: Jun 2007
Position: Legacy FO
Posts: 4,105
Oil hits high for 2009 as dollar plunges
As we continue to devalue our currency by pumping massive amounts of dollars into circulation, the price of oil will spike. This has happened everytime in history when our government has tried to spend us out of a depression. Hold on folks ...
Oil hits high for 2009 as dollar plunges - Yahoo! Finance
NEW YORK (AP) -- Oil prices hit news highs for the year Thursday after a decision by the Federal Reserve to spend billions snapping up U.S. bonds sent the dollar tumbling.
Oil is priced in dollars and when the U.S. currency weakens, it essentially makes crude cheaper.
Benchmark crude for April delivery surged $3 to $51.14 a barrel in light trading on the New York Mercantile Exchange. Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.
With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery. Crude prices on the May contract jumped $2.86 to $51.76 a barrel.
Analysts said investors flocked to crude stocks after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the economy with lower rates on mortgages and other consumer debt.
The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.
"You're seeing wild swings in a lot of commodities today," said Phil Flynn, analyst at Alaron Trading Corp. "The government is basically printing money to buy back all this paper, and it devalues the dollar."
The U.S. dollar dropped against other major currencies Thursday morning. The euro traded at $1.3542, up from $1.3424 late Wednesday.
Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said. "If this doesn't work, they're out of bullets."
The jump in oil comes despite a government report Thursday that said jobless claims set a new record for the eighth straight week. The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.
However, initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000. That was better than analysts' expectations.
Natural gas prices surged Thursday on a government showiing that U.S. stockpiles fell slightly more than expected last week.
The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.
Gas prices increased 1.3 cents a gallon overnight to a new national average of $1.933 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are 2.7 cents a gallon cheaper than a month ago and $1.346 a gallon cheaper than last year.
In other Nymex trading, gasoline for April delivery jumped by more than 6 cents to $1.4292 a gallon, while heating oil rose more than 9 cents to trade at $1.3574 a gallon. Natural gas for April delivery rose 44 cents to $4.121 per 1,000 cubic feet. In London, Brent prices rose $2.62 to $50.28 on the ICE Futures exchange.
Associated Press writers Ernest Scheyder in New York, George Jahn in Vienna, Austria and Alex Kennedy in Singapore contributed to this report.
Oil hits high for 2009 as dollar plunges - Yahoo! Finance
NEW YORK (AP) -- Oil prices hit news highs for the year Thursday after a decision by the Federal Reserve to spend billions snapping up U.S. bonds sent the dollar tumbling.
Oil is priced in dollars and when the U.S. currency weakens, it essentially makes crude cheaper.
Benchmark crude for April delivery surged $3 to $51.14 a barrel in light trading on the New York Mercantile Exchange. Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.
With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery. Crude prices on the May contract jumped $2.86 to $51.76 a barrel.
Analysts said investors flocked to crude stocks after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the economy with lower rates on mortgages and other consumer debt.
The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.
"You're seeing wild swings in a lot of commodities today," said Phil Flynn, analyst at Alaron Trading Corp. "The government is basically printing money to buy back all this paper, and it devalues the dollar."
The U.S. dollar dropped against other major currencies Thursday morning. The euro traded at $1.3542, up from $1.3424 late Wednesday.
Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said. "If this doesn't work, they're out of bullets."
The jump in oil comes despite a government report Thursday that said jobless claims set a new record for the eighth straight week. The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.
However, initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000. That was better than analysts' expectations.
Natural gas prices surged Thursday on a government showiing that U.S. stockpiles fell slightly more than expected last week.
The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.
Gas prices increased 1.3 cents a gallon overnight to a new national average of $1.933 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are 2.7 cents a gallon cheaper than a month ago and $1.346 a gallon cheaper than last year.
In other Nymex trading, gasoline for April delivery jumped by more than 6 cents to $1.4292 a gallon, while heating oil rose more than 9 cents to trade at $1.3574 a gallon. Natural gas for April delivery rose 44 cents to $4.121 per 1,000 cubic feet. In London, Brent prices rose $2.62 to $50.28 on the ICE Futures exchange.
Associated Press writers Ernest Scheyder in New York, George Jahn in Vienna, Austria and Alex Kennedy in Singapore contributed to this report.
03-19-2009, 09:20 AM
#2
A moment please...
Joined APC: Sep 2007
Position: Just passin' thru
Posts: 769
The price of fuel/oil will spike even higher when the economy begins to recover. Congress still hasn't adressed the problem of long term production/supply issues, as well as the ability of commoditiy speculators to wreak havoc on the transportation sector by bidding up prices on fuel/oil they have no intention of taking delivery on.
03-19-2009, 10:44 AM
#3
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,049
I just hope we don't see a repeat of 2008, when:
and the reality
We need to make money in this industry. Everyone's doing a good job, nobody needs headwinds right now.
Delta confident of 2008 profit
By David Field
Atlanta-based carrier plans to continue its ambitious international expansion following delivery of its first 777-200LR
Delta Air Lines executives are confident the carrier's ambitious international growth plan and emphasis on improved employee morale and customer service will make it profitable in 2008.
"Our plan is to make money this year. [Even with] fuel at $90 to $100 we're still on plan," says Delta president Ed Bastian. "We made over $600 million in 2007, and while oil wasn't at $100, it wasn't far from that."
By David Field
Atlanta-based carrier plans to continue its ambitious international expansion following delivery of its first 777-200LR
Delta Air Lines executives are confident the carrier's ambitious international growth plan and emphasis on improved employee morale and customer service will make it profitable in 2008.
"Our plan is to make money this year. [Even with] fuel at $90 to $100 we're still on plan," says Delta president Ed Bastian. "We made over $600 million in 2007, and while oil wasn't at $100, it wasn't far from that."
Delta's 2008 net loss was $503 million, or $1.08 per diluted
share, excluding (1) special items that primarily consist of an over
$900 million non-cash charge related to employee equity awards that
were issued or vested in connection with the merger and $7.3 billion in
non-cash goodwill and other intangible asset impairment charges
reported earlier this year, and (2) a $91 million loss on out-of-period
fuel hedges. Delta's reported 2008 net loss was $8.9 billion, or $19.08
per diluted share.
share, excluding (1) special items that primarily consist of an over
$900 million non-cash charge related to employee equity awards that
were issued or vested in connection with the merger and $7.3 billion in
non-cash goodwill and other intangible asset impairment charges
reported earlier this year, and (2) a $91 million loss on out-of-period
fuel hedges. Delta's reported 2008 net loss was $8.9 billion, or $19.08
per diluted share.
03-19-2009, 03:35 PM
#5
Gets Weekends Off
Joined APC: Feb 2008
Position: 737 Captain
Posts: 875
Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said. "If this doesn't work, they're out of bullets."
I disagree. This type of policy was used in the last 8 years and we need a new drug.
I disagree. This type of policy was used in the last 8 years and we need a new drug.
03-20-2009, 01:15 PM
#7
Gets Weekends Off
Joined APC: Mar 2008
Posts: 3,913
Heyas,
People are still overestimating estimate the condition of the economy. If this "bullet" fails, and it will, the economy is going to collapse.
People should now be looking how to convert what assets they have into cash. You should have 12 months cash on hand, liquid, at the very minimum.
And I'm not even a pessimist. Some gurus out there are saying you should have 24 months worth of cash, and an exit/escape plan from the cities if and when they turn "feral", which would likely occur if unemployment reaches %20.
I understand the upper midwest is still in good shape, and has minimum exposure to the real estate/credit meltdown.
Nu
People are still overestimating estimate the condition of the economy. If this "bullet" fails, and it will, the economy is going to collapse.
People should now be looking how to convert what assets they have into cash. You should have 12 months cash on hand, liquid, at the very minimum.
And I'm not even a pessimist. Some gurus out there are saying you should have 24 months worth of cash, and an exit/escape plan from the cities if and when they turn "feral", which would likely occur if unemployment reaches %20.
I understand the upper midwest is still in good shape, and has minimum exposure to the real estate/credit meltdown.
Nu
03-20-2009, 01:33 PM
#8
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,049
Nu,
I'm holding at least 18 months in cash and another half year in my play account.
Wonder if I should be selling equities?
It has always been a bad move to sell out your 401K during a dip, but this is clearly a deflationary collapse and those who need money are going to be selling into a market with no buyers.
I'm holding at least 18 months in cash and another half year in my play account.
Wonder if I should be selling equities?
It has always been a bad move to sell out your 401K during a dip, but this is clearly a deflationary collapse and those who need money are going to be selling into a market with no buyers.
03-20-2009, 06:26 PM
#9
Line Holder
Joined APC: Oct 2008
Posts: 59
Gentlemen, please let us not get carried away...
1. If you think unemployment is going to 20%, then do not worry about your airline job, because it will not exist in the near future. Buy a bunch of good movies, move into a cave, and hide until the Ice Age is over.
2. The rise in recent oil prices (and when I say oil, I am referencing the WTI spot price of the front month contract of crude traded on the NYMEX) is due to the reflation trade. In a time where traders fear a possible return of inflation, they will flock to commodity driven investments. Why? Because commodities provide tangible value and will rise rapidly during an inflationary period.
3. INFLATION RIGHT NOW IS GOOD. Not Zimbabwe or Brazil hyperinflation, but rather, a modest inflationary trend that will get us out of a deflationary spiral.
4. The dollar is the World's reserve currency. It is the safe haven of the World. Because it is the World's reserve currency, our Fed can run large deficits. The demand for US Treasuries has not subsided in the recent past, rather is has grown EXPONENTIALLY. The US treasurey Note, Bill and Bond are guaranteed by "the full faith of the government of the United States" and HAVE NEVER DEFAULTED. Yes, it is the only 100% secure investment in the World. That is why the governments of China, Japan, Russia (yes, Russia), GBR, etc are invested in them.... heavily.
5. Being in an all cash position is not smart either. If you are risk adverse and do not want to take advantage of the buying opportunity of a lifetime, that is fine. But at least have your money in some form of a liquid money market or savings account that returns 2-3%. Otherwise you are letting someone else (Bank) use YOUR money for free. If you are deathly afraid of equities, there are several other options out there for your money. Your money is FDIC secured in a bank and has other assurances put on it if you have a brokerage account and/or other types of investments up to a certain amount.
6. If you have rode the bear market down this far, now IS NOT the time to pull out the money in your IRA, etc if you do not absolutely need it in the next five years. Rather, now might be the time to add to it... just MHO. Take a look at returns over the past 80 years following a bear market. The DJI average return in the year after a bear market hits bottom is somewhere around 25%. That will not get us back to 14,000, but it is a start... and only in a year. I am not calling a bottom either... sucker's bet... we may test the lows once or twice more, but eventually, we will rise out of the recession and growth will return to our economy.
7. If we hit the 4th quarter of this year with negative GDP, it will be the first time that GDP has been negative for 4 consecutive quarters since the GD. That being said, this IS NOT the GD. Light is at the end of the tunnel. Look at popular sentiment... fear dominates airline boards, trader markets, the news.... That is a good sign of a capitualatory bottom. Do not sell INTO WEAKNESS. Contrarians always win in the market.
Cheers, good investing to you all....
3W
1. If you think unemployment is going to 20%, then do not worry about your airline job, because it will not exist in the near future. Buy a bunch of good movies, move into a cave, and hide until the Ice Age is over.
2. The rise in recent oil prices (and when I say oil, I am referencing the WTI spot price of the front month contract of crude traded on the NYMEX) is due to the reflation trade. In a time where traders fear a possible return of inflation, they will flock to commodity driven investments. Why? Because commodities provide tangible value and will rise rapidly during an inflationary period.
3. INFLATION RIGHT NOW IS GOOD. Not Zimbabwe or Brazil hyperinflation, but rather, a modest inflationary trend that will get us out of a deflationary spiral.
4. The dollar is the World's reserve currency. It is the safe haven of the World. Because it is the World's reserve currency, our Fed can run large deficits. The demand for US Treasuries has not subsided in the recent past, rather is has grown EXPONENTIALLY. The US treasurey Note, Bill and Bond are guaranteed by "the full faith of the government of the United States" and HAVE NEVER DEFAULTED. Yes, it is the only 100% secure investment in the World. That is why the governments of China, Japan, Russia (yes, Russia), GBR, etc are invested in them.... heavily.
5. Being in an all cash position is not smart either. If you are risk adverse and do not want to take advantage of the buying opportunity of a lifetime, that is fine. But at least have your money in some form of a liquid money market or savings account that returns 2-3%. Otherwise you are letting someone else (Bank) use YOUR money for free. If you are deathly afraid of equities, there are several other options out there for your money. Your money is FDIC secured in a bank and has other assurances put on it if you have a brokerage account and/or other types of investments up to a certain amount.
6. If you have rode the bear market down this far, now IS NOT the time to pull out the money in your IRA, etc if you do not absolutely need it in the next five years. Rather, now might be the time to add to it... just MHO. Take a look at returns over the past 80 years following a bear market. The DJI average return in the year after a bear market hits bottom is somewhere around 25%. That will not get us back to 14,000, but it is a start... and only in a year. I am not calling a bottom either... sucker's bet... we may test the lows once or twice more, but eventually, we will rise out of the recession and growth will return to our economy.
7. If we hit the 4th quarter of this year with negative GDP, it will be the first time that GDP has been negative for 4 consecutive quarters since the GD. That being said, this IS NOT the GD. Light is at the end of the tunnel. Look at popular sentiment... fear dominates airline boards, trader markets, the news.... That is a good sign of a capitualatory bottom. Do not sell INTO WEAKNESS. Contrarians always win in the market.
Cheers, good investing to you all....
3W
03-20-2009, 07:34 PM
#10
Line Holder
Joined APC: Oct 2008
Posts: 59
Right after I posted the article above, I sat down to read a great article in the WSJ on the front page of the Money and Investing section about inflation, money supply and the velocity of money. The article addresses many of the inflation fears that are in this thread. FOX news is only going to give you their politicized view of how the current Administration's policy is affecting the direction of the economy. The article is titled "Best Check on Inflation: Broken Banks" by Mark Gongloff.
3W
3W
Thread
Thread Starter
Forum
Replies
Last Post
unemployedagain
Hangar Talk
26
02-07-2009 05:37 PM
