Brent oil price nears $86, US Dollar Index will trade lower

7 October 2010 7 October 2010

BonTrade

Brent oil prices open Thursday’s trading session near the $86 a barrel mark and it’s clear that the recent slide in the US Dollar Index has many investors betting that the dollar will trade lower in the short term at least.

In London, Brent crude oil futures for November 2010 delivery was trading at $85.64 a barrel, 07.45 GMT on the ICE Futures Exchange.

US Dollar Index is Faltering

Meanwhile, the US Dollar Index has again begun falling, touching 77.73 yesterday and should continue to loose ground.

Brent oil prices have surged above $80 in the last week amid a plunge in the US dollar as investors anticipate that US interest rates could head even lower.

The US Federal Reserve may soon move to buy Treasury bonds and take other measures to lower long term interest rates in an attempt to boost a faltering US economy. These latest measures will have a negative effect on the US dollar and will boost oil prices and other commodities.

US Dollar Weakness is Boosting Oil Prices

Recent gains in oil prices can mostly be placed on weakness in the dollar against the euro as a weaker US dollar means that commodities including oil are cheaper for buyers using other currencies.

Brent Oil Prices Back at $100?

Brent oil futures 2010 trading high of $87 is fast approaching as investors start to guess that oil prices could end the year much higher, maybe back near the $100 mark which was last reached in Setpember 2008.