The Saudi forecast still sound too high but the trend with both the dollar and oil prices is not encouraging. Economy recovery seems like less of a factor in the oil price surge as opposed to the weakening dollar. When the government prints money, this is bound to happen and in general the effects of the stimulus plan have yet to be realized. Once they kick in the focus could easily then to the positive aspects of the US economy compared to the sluggishness of other economies. This is all assuming the US economy shows positive signs late this year or early 2010. Then we have to hope that inflation doesn't become the primary issue and lead the US down, again.
Oil prices hovered above $68 a barrel Wednesday in Asia near a seven-month high as investors sought a safe haven in commodities from a weaker U.S. dollar and inflation.
Benchmark crude for July delivery was up 9 cents to $68.64 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract slipped 3 cents to settle at $68.55.
Oil prices have doubled since March amid signs that the worst of a severe recession in the U.S. may be over. Some investors are also concerned that the massive fiscal and monetary stimulus package unleashed this year will spark inflation and undermine the dollar, which has fallen sharply against the euro.
"This is not so much driven by the expectation of an economic recovery, but to new money seeking an inflation hedge," said Marius Botha, who helps manage a commodities hedge fund for London-based Threadneedle.
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