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Oil’s Big Tumble
Good morning!
We see that oil is below $66 a barrel this morning, tumbling 55% from its peak of $147 in mid-July, with no end to the slide in sight. Despite much talk of an OPEC supply cut to support prices at an emergency meeting on Friday, I wouldn’t hold out much hope as OPEC has demonstrated a marked lack of discipline in past attempts to rein in production. That’s why, as the global economic slowdown accelerates, I’m expecting oil prices may fall to levels not seen in more than a decade.
With the slide in oil we see a corresponding slide in the Canadian dollar. Of course, this is actually good news for exporters, like Alberta's life science companies, as it helps to make them more competitive relative to their American counterparts.
So will innovative technology companies like Picomole get a second look from the local investors that have been busy chasing bubbles in commodity prices and real estate? I for one certainly hope so.
Yours truly,
John
Update 1 - For further reading, check out Mish's Global Economic Trend Analysis blog. This is one of the best blogs out there, and highly recommended reading for anyone looking for insightful analysis on the financial crisis. Looks like Mish posted his entry on the US Dollar and the Yen not long after my post. His last paragraph bears repeating:
"That said, I will caution commodity bulls that this dollar rally can last a lot longer than anyone thinks. Furthermore, I am quite certain the recession will be much deeper and last longer than most expect. As a result, commodities will likely be under pressure for some time, regardless of what the dollar does."