The Secretary of OPEC, short for the Organization of Petroleum Exporting Countries indicated in a statement today that the price of crude oil is at comfortable levels. When you consider that oil prices were $75 dollars within the last 6 weeks, it isn't a surprise to hear support for these levels by an "employee" of the oil producing "cartel". The Forex Robot team believes that current oil prices, which are hovering close to $100 continues to be elevated as a result of speculation. As explained in an earlier post, this speculation stems from continued unrest in the Middle East , tension with Iran, and recent positive economic indicators in the U.S. (despite being without a plan to cut spending). While we recognize that countries like Brazil and many Asian countries continue to experience rapid economic expansion, thereby requiring more commodities and fuel, unresolved issues in the Euro-zone and debt issues in the United States will stifle demand.
One could argue that the continued policy of monetizing debt by the Federal Reserve and the recent adoption of this strategy by the European Central Bank has and will continue to cause increased prices. This will make commodities more expensive to purchase. Additionally, both the USD and EUR currency will depreciate against other currencies in the long term. The real question we're asking ourselves among the Forex Robot team is whether the EUR will survive in it's current form. The future of the Euro-zone continues to be uncertain. Despite this, EUR/USD is trading over $1.35. This means one of two things: 1.) The global community has very little faith in the USD. 2.) The EUR is too expensive and needs to be devalued through calculated stimulus packages. This will in-turn cause the EUR to devalue against other currencies, making trips to Europe and European goods more attractive. The flip-side of this policy is that other resources that European countries depend on that are produced elsewhere will become more expensive.