Fuel Squeeze in China Drives Crude Toward $100: Energy Markets

Global fiat devaluation is sending oil towards (and above) $100. Chinese demand provides a more media-friendly explanation, though.

U.S. Dollar Index vs Crude Oil:


The rising price of oil, however, does not mean it's the best hedge against currency devaluation. The lower channel magnet, driven by gold, is pulling hard.

West Texas Intermediate Crude Oil to Gold Ratio (Oil/Gold):

China’s drive to curb energy use is exacerbating a shortage of diesel, sending refining profits to the highest level in almost two years and raising the likelihood oil will trade at $100 a barrel in coming months.

The return from processing Dubai crude into diesel, or gasoil, climbed above $14 a barrel in Singapore today, the most since January 2008, after service stations ran dry in China’s eastern and southern coastal provinces, according to prices from PVM Oil Associates, a London-based brokerage. The margin from turning Brent into gasoil in Europe climbed 15 percent since Nov. 5, prices on the ICE Futures Europe exchange show.

Source: finance.yahoo.com