Commodity Daily News

Weakened Stock Markets Convince Traders to Invest in Oil

The upsurge traders saw in the price of Crude Oil yesterday did not stop for some time as it reached as high as $97 towards the end of the trading session. A spike attributed to a market test of Crude Oil's downtrend as well as the recent flight of investors away from the decreasing value of stock markets which felt the heat from the US bailout of AIG and Lehman's collapse.

Commodities such as Crude Oil and Gold have historically been fall-back trades which help stabilize losses in light of weakening markets. When the strength of a currency such as the USD becomes weakened, traders begin buying these commodities to park their money somewhere more stable. This drives the price of these commodities higher. An event the market witnessed in July as the dollar's strength continued its tremendous fall, and forced the price of Oil to hit a record high.

Analysts are unsure about how good an investment Crude Oil will prove to be, however. The issue of supply has ceased to be an issue lately. This commodity's price seems to be completely focused on demand, which has done nothing but drop steadily since mid-July and is predicted by OPEC to go down even further in the coming months. Right now the price of Oil has settled around $95 and seems to be trading within a small range, a signal that this rally may be coming to a close and the price is about to continue its previous decline inline with falling demand.