What is happening to Oil Price

Four factors that are affecting the oil price.

1. US dollar strength, I guess it is a good time again to have a look on the US dollar index. Staring from 7th June, 2010, the US dollar index has been declining from around 88 to 81. Which mean US dollar is relatively depreciating with other currency. This also state that US dollar is weaker in recent.

Weakening USD could be explained by:

• The re-calculated GDP data in USA
• The GDP prediction in USA
• The double dip rumours
• The long term depreciation in USD
• The basic fundamentals factors thats happening in USA

2. The crazy drop that happened in three months ago. Oil price dropped from $86 to $67. Nothing much to explain about the drop. The most reliable that could explain this drop are USA economic data. Powerful trader should have been collecting oil in the range from $67-$76. Oil market in the supply side is so weak in the range $76-$80. Thats why when Alex, the hurricane came by, oil price easily move up. Remember, $76-$80 range is so thin. Not much people are willing to sell in this range. Oil price can easily move in this range controlled by the powerful traders

3. Hurricane effect. According to some estimation, 2010 will be a year that attract hurricane the most.

4. Developing country, like China, has increased the oil consumption in a increasing rate.

All in all, oil price will shift around $78-$83 for the coming days. Try to buy in dip

Thanks

Paul Ng