The price of oil rose to a three-month high on TuesdayThe price of oil rose to a three-month high on Tuesday even as negative economic reports continue to suggest the economy has stalled.

Oil futures traded at $82.39, up $1.05, or 1.3%. Crude continues its break above the $80 mark, after gaining 4.4% in July, the biggest monthly gain since March. Prices are now 17% higher than a year ago.

Some analysts attribute the resiliency of crude prices to the weak U.S. dollar, while others believe a bullish sentiment about growth in 2011 has taken hold, and the market is beginning to price in economic growth that isn't yet evident in the numbers. In such an environment, expect continued volatility as oil prices are likely to climb higher into December.

"With this conclusive break above the $80 price level, market participants are now looking for a $80 to $90 range during 2010 H2," says Samarjit Shankar, the managing director of global strategy at Bank of New York Mellon. "Despite widespread expectations of a slight moderation in global growth during the second half of this year, most emerging countries and regions are looking for stronger growth in 2011."

Home Sales, Factory Orders Down in June

Reports of a 2.6% decrease in the National Association of Realtors' index of used home sales in June and a 1.2% drop in June U.S. factory orders on Tuesday didn't discourage the surge in oil prices. In spite of the indications that the U.S. economy continues to weaken, the market focused on the dollar's weakened position against the euro. A weak dollar supports oil prices, so oil surged.

The dollar index, which measures the U.S. dollar against six other major currencies, fell to 80.589, from 80.870 on Monday. According to Bloomberg, the dollar has declined against 16 major currencies over the last month, including a 5% drop against the euro and 4.7% against the pound.

Phil Flynn, energy analyst at PFGBest, light-heartedly suggested that oil prices were heading higher no matter what the economy does.

"If the economy gets worse, the Fed is going to print more money [which weakens the dollar and supports higher oil prices]! If the economy gets better, well then that is inflationary, because supply will tighten, driving up prices!" he said in his daily note to investors. "It is like a freaky, two-headed bullish coin, or maybe even a coin with two bulls on it."

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goldaxe

They should shred that bailout money as they recover
it to stop capital devaluation.Keep only the profits in
circulation if any.

August 04 2010 at 2:59 AM Report abuse rate up rate down Reply
erink91321

As Oil and Energy prices Surge, Hopes Fade for a 2011 Recovery since High Energy Prices will rob consumers of Extra Spending Money. It Happened before

August 04 2010 at 2:28 AM Report abuse +1 rate up rate down Reply
.kowalski440mag

Wrong! Not a bullish coin.....a bullshi_ coin!!!!!

August 03 2010 at 9:44 PM Report abuse rate up rate down Reply
skysob

all of a sudden the eurozone economy is doing better! this is all manipulation. if they want the world economy to pick up they need to stop ALL commidity trading and currency manipulation.

August 03 2010 at 7:25 PM Report abuse -1 rate up rate down Reply
Jen

Liberasses, Dems are in control. I thought Big oil had republicans only in their back pocket. Why do you think Dems are not doing anything? Think maybe like want and need tax revenue from more oil company profit. You are so stupid it is sickening

August 03 2010 at 7:17 PM Report abuse rate up rate down Reply
1 reply to Jen's comment
thedtecter

Consumer spending is down, domestic and global manufacturing is down, China reports exports are down, unemployment up in Japan, European markets still in a tiz. So oil miraculously spikes to 3 month high over $82/brl? Are we seeing market manipulation by Goldman to hit their target projection of $95/brl for the year just in time to jack heating oil prices in September when heating season begins......hmmmmm.

August 03 2010 at 7:10 PM Report abuse +2 rate up rate down Reply
johnskii

HERE WE GO AGAIN..... DOUBLE DIP RECESSION OR CAN YOU SO THE GREATEST DEPRESSION!

August 03 2010 at 7:10 PM Report abuse rate up rate down Reply