The Oil Drum

61 comments on European gas supplies and a more than gentle cough from Russia

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Dragonfly41 on April 25, 2006 - 8:45am

westtexas -

Kudos for your honesty and I agree with your assessment of commodity prices and the inverse relationship of the dollar. This latest rise in oil may be nothing more than the mere fact that it now takes more dollars to buy the same amount of oil that it did a few months ago. That could be verified by figuring the cost in euros over the last several months. How much has that fluctuated?

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BrianT on April 25, 2006 - 10:22am

If the US dollar had kept pace with the Cdn dollar since 2002, oil would be priced at $50 right now.

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Dragonfly41 on April 25, 2006 - 10:44am

Has anyone plotted the relationship of the value of the US dollar against oil and gold. How strong is that inverse relationship?

Today, I've seen oil prices inch up as the value of the US dollar has dropped and reverse that trend as the US dollar regained some value.

Who's the chicken and who's the egg here?

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BrianT on April 25, 2006 - 11:11am

The chicken is the demand/supply oil situation. The egg is the USA's horrendous fiscal and trade situation.Or vice versa-it is a mess.

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Alaskan Pete on April 25, 2006 - 11:15am

What you really want to plot is oil:USD on one chart and oil: oz gold on the other chart. Gold is money. Comparing it to other paper fiat currencies (i.e. not backed by gold or silver) is to bring in the vagaries of that specific country. I.e. with AUD, you have the large current account deficit, same with NZD. I don't know how to format here to insert an image, but here's a link to oil:gold chart for the last 3 years. http://stockcharts.com/c-sc/sc?s=$WTIC:$GOLD&p=W&yr=3&mn=0&dy=0&id=t31084408462& amp;r=4249 As you can see from the chart, oil is rising even vs. gold.

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Alaskan Pete on April 25, 2006 - 11:17am

What you really want to plot is oil:USD on one chart and oil: oz gold on the other chart. Gold is money. Comparing it to other paper fiat currencies (i.e. not backed by gold or silver) is to bring in the vagaries of that specific country. I.e. with AUD, you have the large current account deficit, same with NZD.

I don't know how to format here to insert an image, but here's a link to oil:gold chart for the last 3 years.

http://stockcharts.com/c-sc/sc?s=$WTIC:$GOLD&p=W&yr=3&mn=0&dy=0&id=t31084408462& amp;r=4249

As you can see from the chart, oil is rising even vs. gold.

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alistairC on April 25, 2006 - 11:14am

The $US has been pretty stable against the yen and the euro for the last two and a half years. It hasn't started to drop yet. Can't really blame oil prices in the US on that.

Once the smoke clears and the mirrors break, there's going to be a hell of a fall.

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Alaskan Pete on April 25, 2006 - 11:19am

What are you smoking? The dollar was bottoming off a 3 year downtrend against the Euro a year ago (went from roughly par to 1.30!), rallied for a year, and has resumed it's downtrend. It has hardly been "stable" against the Euro, unless you figure 10% annual swings being "stable".

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BrianT on April 25, 2006 - 11:25am

The US dollar has lost 44% against the Cdn dollar since the Cdn dollar low in 2002.

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