Monday, November 8, 2010

Oil Prices Today Hit Two-year High, Nigerian Rig Attacked

With the announcement the Federal Reserve was going to print another $600 billion in U.S. dollars to buy up government debt in an attempt to stimulate the economy, oil prices, and other commodities, have been pushed up as the value of the U.S. dollar continues to plummet.

That means the industry is under tension, and when anything is added to the mix, oil prices can spike, like they have today with the reported attack on a Nigerian oil rig.

The main contract for light sweet crude for December delivery in New York surged to 87.49 a barrel, reaching its highest level since the latter part of 2008.

In Nigeria an oil rig in the Okoro field was attacked, with five crew members thought to be taken hostage. Usually that results in a ransom demand being made and paid to criminal gangs operating in the region.

So with the new implementation of quantitative easing, every time something major happens affecting oil prices, one way or the other we'll see swings in price in response to them.

Going forward, most of that will probably be on the upside for oil, as well as a number of other commodities.

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