Inflation and Demand Drive Oil Higher

Obama's fiscal disaster is weakening the dollar at the same time demand for oil is growing. This double whammy is causing oil and gas prices to spike. Who suffers the most from this, the very middle and working class Obama claims to fight for.

NEW YORK (Dow Jones)--Crude oil futures on Thursday extended their rally to a third day, propelled by a weak dollar and a forecast from the International Energy Agency for stronger demand.Light, sweet crude for July delivery settled at $72.68 a barrel, climbing $1.35, or 1.9%, on the New York Mercantile Exchange and notching a fresh seven-month high. Brent crude on the ICE Futures exchange settled 99 cents, or 1.4%, higher at $71.79 a barrel.

Traders say that oil prices, which have risen 24% in the last month, could easily rise as high as $76 a barrel in the coming days if the dollar continues to slide. Investors have bet on an impending economic recovery by selling the dollar and buying riskier assets, including commodities. This trend accelerated Thursday on U.S. reports of a declining number of new jobless claims and a slight uptick in retail sales. Oil, priced in dollars, also provides a safeguard against inflation. The euro recently traded at $1.4127.

"Inflation concerns are the biggest component of the oil rally," said Peter Donovan, vice president at Vantage Trading.The price increase was also supported by an IEA forecast that increased projected 2009 oil demand by 120,000 barrels a day, to 83.3 million barrels a day. Although the IEA expects some developing countries, including India, to show stronger growth than anticipated, global demand is still seen falling 2.9% from 2008. The upward revision was the first in 10 months.

Its not like we didn't see it coming. Right now gas has shot up to 2.73 around the corner and may hit 3 dollars or more for the summer.