Jim Sinclair’s Commentary

If oil is up basically due to dollar weakness (other events being noise) what will commodity prices be when the US dollar is at .5200 on the USDX? Certainly the answer is not lower.

Oil surges as investors hunt an 'anti-dollar'
By Ambrose Evans-Pritchard
Last Updated: 12:56am BST 17/04/2008

Oil prices have surged to almost $115 a barrel as China builds up stocks before the Olympics and hedge funds pour money into commodity futures as a way to exploit the collapse of the dollar.

The Opec producers cartel yesterday defied calls from Gordon Brown for a boost in output to help ease the global shortage, sticking to its target of 32m barrels per day (bpd) for the next three months.

There is some evidence that Opec has actually cut output by 350,000 bpd since the start of the year - a hostile move in the current climate. It blames the latest spike on "speculators", claiming that world demand will fall 1.4m bpd to 85.7m this quarter as the US grapples with recession.

Nobody else can step into the breach. Output is falling in the non-Opec trio of Britain, Norway and Mexico. Russia's production slipped 1pc in the first quarter. The cost of developing oil fields worldwide has doubled in three years. The cost of operating an oil rig per day has risen from $200,000 to $600,000 since 2003.