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Oil prices dip despite rising stock prices |
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Tuesday, 06 January 2009 15:29
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Oil prices dipped slightly today as traders took the profits out of a brief rally over the last few days. Oil prices are sensitive to international risk issues but despite the unrest in the middle east and the Russian dispute with Ukraine price movement has been muted.
This is particularly interesting as oil has not kept up with rising equity prices either. In the recent past, oil prices have risen with the stock market as investors anticipate greater demand for energy as the economy recovers. All fundamentals at this point seem to be pointing to a falling trend in oil prices and commodities in general in the near term.
This is also not good news for the commodity currencies. A depressed Australian, New Zealand and Canadian dollar are likely to see more downside if commodity prices, including oil, do continue falling. Forex traders are evaluating new short positions and institutional investors are still net sellers in those currencies in the futures market. That pressure could present a new entry opportunity for shorts.
To see today's market videos, click here.
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