Crude Oil
Bullish factors for crude oil prices yesterday included
(1) the decline in the dollar index to a 1-week low,
(2) comments from Libya's top oil official that OPEC should make "substantial" output cuts when it meets next week,
(3) the rally in global equity markets, and
(4) speculation that President-elect Obama's pledge to create the biggest US public works program in 50 years will increase energy demand.
The main bearish factor for crude oil prices yesterday was continued concern about the weakening global economy, which should curtail overall crude oil demand.
US Dollar
Bearish factors for the dollar yesterday included
(1) reduced flight-to-safety demand into the dollar as global equity markets rallied, and
(2) President-elect Obama's talk of more fiscal stimulus and his pledge for a mammoth US infrasructure spending plan, which could ease the global credit crisis and thus reduce demand for dollars.
Bullish factors for the dollar yesterday included
(1) the prediction by Deutsche Bank AG that the ECB will cut its benchmark lending rate to 0.75% by the middle of next year as the European economic situation continues to deteriorate,
(2) the larger-than-expected decline of -3.8% y/y in Oct German industrial production, which was the largest y/y decline in 6-1/2 ye ars, and
(3) the larger-than-expected fall in the Dec Euro-Zone Sentix investor confidence to its lowest level since the data series began in July 2002.
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