Tuesday, May 6, 2008

Back on the (Weak Dollar) Train

The weak dollar plays are out in full force again. We've got crude oil rising over $120/barrel, and the typical reaction. Every time oil spikes, they go to the commodity analysts for their two cents, and they throw out a projection that scares the market. Today it was $200/barrel. Here's the quote, "Oil prices are increasingly likely to hit between $150 and $200 a barrel over the next six to 24 months." Hmmm. Sounds like a pretty broad price range, and a pretty broad time frame. Funny how that quote got shuffled into "$200 OIL PREDICTION ROCKS MARKET."

I think oil will continue to rise as long as the dollar continues to weaken and there is no sign of a change in our country's energy policy (or lack there of). I suppose we need to keep in mind that a geopolitical event or bad weather could push oil higher, but neither of those have really been a factor in the past year. I'd focus more on the weak dollar and demand.

Portfolio holding Noble (NE) is continuing to climb, and has a nice outlook with oil at this level.

Solar stocks and other alternative energy plays usually rise as oil prices rise, and I'd look for that correlating trend to continue.

Quote from Goldman Sachs.
Headline from Drudge Report.
Disclosure: Long NE.

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