LGX Oil + Gas Inc ROAOF

RE: Light Sweet Crude $ 104.69 + 0.17

[TO1]

"Slowly creeping up. US shortage on the supply side." The rise in the oil price has nothing to do with US crude stocks. US crude stocks are at their 5-year average, gasoline in well above average and distillates are well below the average. Until yesterday’s US inventory numbers crude inventories have been raising over the last 7 straight weeks. The price should have fallen over that time, but it didn’t for the same reason as all other commodities rose. The US dollar has been falling consistently over that same time. Hedge Funds are using oil, gold, silver, copper and every other commodity priced in US$ as an offsetting currency against the US dollar’s fall. It has nothing to do with inventories on any of these commodities. The increase of the oil price will mean nothing to the share price if the Canadian dollar continues to appreciate against the US dollar at the same rate the oil price rises. They will wash each other out. If the Bank of Canada did not cut the interest rate this by 50 basis points to 3.5% the $Cad would be near $1.10 US, especially with the US still looking to cut rates further. That would have been a 10% increase in the value of the current CAD$ and that would have decreased the relative value of crude buy the same 10% in CAD$. Crude’s value in CAD$ only increases if the CAD/US exchange rate stays near 1:1 or decreases and the crude price continues to increase. The only situation where it is beneficial for crude to increase and have a positive effect on the SP of an oil company, without taking into account the US exchange rate with your currency, is if you are an American holding onto oil companies that have oil production in the US. Other than that you have to take the exchange rates into consideration to figure what the SP of a company is pricing in terms of CF, production etc.