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Oil prices are up after Fed’s move to jump start the economy

Marketplace Staff Nov 8, 2010
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Oil prices are up after Fed’s move to jump start the economy

Marketplace Staff Nov 8, 2010
HTML EMBED:
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TEXT OF INTERVIEW

BOB MOON: The cost of crude has been up as much as six percent since the Federal Reserve’s took new action to jump-start the economy. It’s worth noting that oil producers deal in dollars, and if those dollars are worth less, they want more of them to pay for their product. But investors are also looking for the best way to grow their money.

And Dave Hacket tells us they’re putting their faith in oil and other necessities. He’s an energy consultant with Stillwater Associates. Mr. Hacket, good morning.

DAVE HACKET: Good morning, Bob. How are you?

MOON: Good. Why this relationship between what the Fed is doing and rising oil prices?

HACKET: Investors suspect that the price of the dollar is going to go down the dollar will weaken. And therefore they’re flee from the dollar into other commodities and oil is one.

MOON: So what happens from here? Do crude prices keep trending higher?

HACKET: That gets to be a really good question. What you can see clearly is there’s an inverse relationship between the dollar and and crude oil prices. So when the dollar goes down, crude oil strengthens. On the other side, if the dollar starts the strengthen and it may be doing that, the crude oil prices will weaken.

MOON: But at this time of the year, crude oil prices normally would be doing what?

HACKET: Normally this time of year, crude oil prices go down. This is the season where oil prices — crude oil and gasoline and heating oil prices — tend to peak around now and then go down into the spring.

MOON: We’ll keep our fingers crossed that happens. Dave Hacket at Stillwater Associates, thanks for your insights.

HACKET: You’re welcome.

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