Oil trades on $70-handle

A big build in crude inventories has oil futures trading on the $70-handle. Small consolation to those of us who’s college and retirement accounts have been vaporized in the last month, but it is an important counterweight to help offset the economic drag from the credit crisis.

EUR/USD is only modestly lower after the late-London fixing, trading at 1.3400. Stocks are diving once again, though, down 300 points.

Goldman calls for $50 oil

Goldman called the “super spike” in oil, first $100 and then $150. They now see crude sliding to $50 on global economic weakness.

Equity markets are off their early highs in US trade, trading up about 300 points in the Dow and the dollar is off its lows. 1.3680, the high from last Thursday, capped the rally first time up this morning.

There’s some good news in the world

As the owner of a very thirsty SUV, this headline was music to my ears.

OPEC to meet next month to talk about production cuts

Amid a global economic slowdown, Opec has announced a November 18 meeting in Vienna to discuss production cuts. Crude prices trade around $89 and are down year-to-date after peaking at $147 in July.

Oil under renewed pressure as inventories build

Crude is down $4 now with a build in inventories and a 4.5% drop in gasoline demand from a year ago helping weigh. This is helping underpin dollar/Europe which really doesn’t need much more support today. Russian sales of EUR/USD have been the dominant flow today, dealers tell us.

Greens back down as November approachs

The earth may have a fever, but the Democrats in Congress have a headache; their ban on offshore oil drilling which is an enormous drag at the polls. With election day approaching, they’ve courageously chosen to let a 25-year ban on offshore oil drilling quietly expire rather than put the matter to a vote ahead of the fall elections. Lifting the ban will not have any immediate impact but it could blunt some of the long-term supply concerns facing the US crude market.

Never seen anything like it

I’ve been trading and watching these markets for 23 years. The last 20 minutes have been among the most astounding (and that comes on the heels of one of the momentus weeks in market history) I’ve ever seen. Oil traded up to $130 as the October contract rolls off the board at 2:30. EUR/USD spiked up to 1.4810 as oil reached its peak. Now I’ve seen everything…

The mother of all short squeezes

This squeeze in oil is breathtaking. The October contract is up to $119…The dollar has decoupled to a certain extent as few see today’s gains as durable. While some may see the US bailout bill as inflationary, the global economy is still weak so a $20 rebound does not make much sense on a sustained basis. It makes plenty of sense when you need to buy something today that will go out of existence before the day is over.

Oil inventories fall, crude easing

Oil inventories fell a greater-than-expected 6.3 mln barrels but prices have dipped in the wkae of the data. Could be a buy-the-rumor/sell-the-fact trade or traders are more focused on the continued slide in equity prices, assuming their fall signal economic weakness ahead.

On the bright side…

Oil prices are at $91.00, a huge plus for a global economy that is being buffeted by an unprecedented financial storm.

Next up for the market is US CPI. Against the present backdrop it is less important than it otherwise would be, but expect a 0.1% decline in headline prices and a 0.2% rise in the core.  With oil prices tumbling, future inflation is sure to come lower later in the year. Rising unemployment and growing financial instability are far more pressing matters. While the transmission mechanism between official interest rates and rates of interest charged by banks is clearly broken, official rates send important signals and it is time for the Fed to try and calm the markets.

Also in focus will be the earnings of the last men standing as both Goldman and Morgan Stanley report earnings at 8:30.