Oil prices hit a 2009 high of $74.48 a little earlier. Recently, as of 9:47 a.m. EDT, the October oil futures contract traded at $74.05 per barrel. The oil market is moving in tandem with the stock market, which is moving slightly higher.
The September dollar contract is trading at 78.025 down 0.425 at 9:36 am EDT. Oil, which is denominated in U.S. dollars, very often moves in the opposite direction of the dollar. With the dollar weaker, it gives yet another support for oil prices.
Meanwhile, all eyes are on Federal Reserve Chairman Bernanke's speech scheduled for 10.00 a.m. EDT for clues on the state of the economy.
A bit of caution is noted as the new rulings of the Commodity Futures Trading Commission's (CFTC) are set to take effect before the end of 2009. These regulations will limit the number of contracts that speculators can hold in the oil and other futures markets.
Much of the rise in oil prices last year to $147 per barrel was due to speculators taking large positions way beyond their ability to take delivery. The value for one oil contract is $72,540. Speculators put up a small fraction of that amount -- often as low as 2%. This high leverage makes for wild price moves, especially when the market goes against them. Much of this year's rise in oil prices from about $32 per barrel to $74 was due to speculation.
Some analysts say that the fundamentals are not there. Freight traffic across North America fell 17.9% in the week ending August 15 from the same period last year.
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