WTI oil trading near $84, higher prices depend on dollar

7 October 2010 7 October 2010

BonTrade

WTI oil futures are trading higher and nearing $84 a barrel this morning as it becomes crystal clear to investors that a weaker US dollar is going to push up commodity prices. Shouldn’t they know that anyway?

US Light crude oil futures for November 2010 delivery was trading at $83.93 a barrel, 07.45 on the NYMEX and looks to have support to go higher, all thanks to dollar weakness.

US Dollar Index Near 2010 Lows

The US Dollar Index, which tracks the US dollar against the currencies of six major US trading partners, hit 77.301 yesterday, the lowest since January 19th 2010.

Gold Prices are a Good Indicator of Oil Prices

Gold prices surged to a record above $1,355 an ounce this morning, boosted by investors seeking to profit from weakness in the dollar.

Gold is traded in US dollars as are oil futures, hence a higher gold price means a higher oil price. Some investors believe that gold prices will rocket over $2000 in the coming years.

“It depends upon what your long term outlook is. I think gold’s going to $2000. So I mean you know you can buy it.” said Jim Cramer on US Mad Money show.