Oil hit another record
Oil has hit another record price, closing at above 129 dollars per barrel for the WTI crude. T.Boone Pickens was on CNBC yesterday predicting that oil is on its way to 150 dollars. Sadly this is not the guy to bet against. Gold was up in yesterdays trade, mostly on the weakness of the US dollar, traders are indicating that this weakness is going to continue, with the British Pound revisiting 1.98 by Thursday, and the Euro visiting the 1.59 area again.
Later this morning, we have the release of the minutes from the last MPC meeting with a vote to hold of 8-1 the most likely action from last time round. We see little potential upside surprise from this release. With the key inflation driver, oil pushing further towards $150, the MPC have little choice but to stand firm on rates for the foreseeable future. Manufacturers are having to cope with extreme inflation in the cost of raw materials and are faced with two difficult options: They can raise prices, or eat into their profit margins on behalf of the consumer. However since most of the consumers are already stretched to the limit with higher prices at the fuel pump no savings, and homes that are worth less then the mortgage, most companies are looking at other alternatives before forcing the consumer to pay the higher price.