Oil prices spike to all time high as dollar and stock market plunge

17-Mar-08
Oil prices have spiked to an all time high- spiking past US$111 per barrel in Asia. Light, sweet crude for April delivery rose to a record US$111.42 a barrel, but later slipped to US$111.10. This hike continues to be prompted increasing investments in commodities as the US dollar continues to slip and the stock markets continue plunging. Investors have turned away from the dollar after a surprise move by the US Federal Reserve on Sunday to provide cash to financially squeezed Wall Street investment houses - a move that has pushed the battered US currency lower against the yen. Market players believe that this move will help the liquidity of the US dollar and will further soften the dollar- leading investors to buying oil and commodities to hedge against the falling dollar and inflation. Interest rate cuts in the US have further weakened the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak.
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