Yesterday Ben Bernanke signaled that the US was going to start supporting a strong dollar policy. This will no doubt start to stop the run up in commodity prices, especially that of oil. A look at gas prices in the chart above shows how irrational the market is at the moment. A smart, high risk trader would certainly short oil futures. If I had the cash I would also buy US dollar futures.
The gloom and doom crowd is predicting $6 a gallon gas prices. It's more likely that by year end we will be at half that price.
Update: from Senate hearings:
“Speculators now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 2000, said Rep. Bart Stupak, D-Mich., chairman of the investigations subcommittee.”
Since then, oil has risen by more than 300 percent. Any questions?
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