Commodity Daily News

Oil Soars as U.S. Dollar Slips and Global Equities Rise

Crude Oil rose 9% to over $54 a barrel on Monday in response to the positive effects that the U.S. government bailout plan of Citigroup had on global markets. Oil has recently dived from a record high of $147 per barrel in July to a year low of $48.25 on Friday. The dive was in response to a deepening recession in the developed countries. Organization of the Petroleum Exporting Countries (OPEC) policy makers stated that a further output cut of more than 1 million barrels of oil per day would be necessary to support the Oil market in its current state.

The dollar's decline against a basket of major currencies added to the rise in Oil prices yesterday. Analysts expect the dollar's weakness to increase the appeal of Oil and other commodities as attractive investments. OPEC Oil ministers are due to meet for informal talks in Cairo on November 29, though a cut in output is not expected to be announced until the next full policy meeting in December. Nevertheless, the recent gain in Crude Oil seems to be more of a simple correction than a steady momentum. Its rally seems to be unsustainable in the face of falling fuel demand and global economic recession.