Oil prices: with a near perfect-storm, oil price will remainelevated. Is this not the scenario Davey was preparing Genoil for? He has previously excused himself and Genoil's failings due to depressed oil prices. Now what is his reaasoning? Crickets-on this, his once-favored thread. "The usual inverse correlation between oil and the dollar remained unchanged in 2020 and into early 2021 as demand for crude was undermined by the global pandemic. But many analysts now expect the positive link to persist given the tight oil market and broader risks to the global economy.
"Considering that spare capacity is low, there are likely larger supply disruptions ahead of us, and that oil demand will likely keep increasing, I would expect that oil will primarily be driven by its own fundamentals," UBS analyst Giovanni Staunovo has said.
With oil currently trading around $115 a barrel, JPMorgan expects Brent prices to average $114 a barrel over the second quarter as whole, and even surge to over $120 a barrel at one point.
Another factor that has been contributing to the disconnect between a stronger dollar and oil prices is the fact that the current energy crisis has hit Europe the hardest: "Historically, energy crises and inflationary shocks were centered on the U.S. and hence dollar bearish," MUFG's head of emerging markets research, Ehsan Khoman has said. Europe-- the region most heavily reliant on Russian energy imports--now happens to be the epicenter of the crisis, and is already grappling with deep energy trade deficits.
"As coal, gas and oil prices continue to remain elevated on supply scarcity, global growth ex-U.S. is suffering more than the U.S. economy, and by extension, the U.S. dollar is appreciating,"