FX Street:

Is oil at a turning point? Get ready bubble buyers as the next big oil bubble is getting inflated once again. There is 1.1 trillion dollars of global economic stimulus and a global interest rate imbalance between the United States and Europe and this is creating the same type of macroeconomic conditions that caused oil to spike up to $147.00 early in this economic crisis. Forget about supply and demand for the moment because they are just a passing afterthoughts. The commodity markets seek to adjust to what the UK Prime Minister calls a ‘New World Order”. A new world order that favors Europe as the money that the G20 pumped into the IMF and the World Bank. And this is money the EU is not going to have to spend to stabilize weaker developing EU Nations.

(snip)

Oil has been soaring ever since that fateful day and now it is getting more bullish as the G20 moves ECB policy, making the Euro the go to currency once again. The ECB, in a consensus decision, cut its benchmark rate to 1.25 percent from 1.5 percent as opposed to the half point the market was looking for. The move was very inflationary for oil as it appeared that the conservative move means by default the EU is in better shape than the US. Dollars flowed out of gold and bonds and gravitated to the stock markets and the Euros. The relative difference between where the US is on rates versus Europe will cause many dollar based global commodities to soar.

My comment: I would add that depletion will supercharge prices as they move towards and overtake the previous old highs.

John Polomny
The Real Deal