hr: Money

Photo Credit: Yosi

Traders are looking to commodities as a hedge against inflation while the US dollar succumbs to the euro in the midst of crude oil price increases. This just goes to show that commodities can be an attractive alternative and tool against inflation.

Crude oil advanced by 33 percent in 2008 while the US dollar dropped by 6.6 percent against the euro. This made oil as well as other commodities more attractive to traders in other currencies. There has been a decline in prices this week following a government report regarding a falling fuel consumption in the US last week as compared to the same period last year.

There has been a rise in the prices of crude oil for July by 73 cents, or 0.6 percent, which translates to $127.35 per barrel. Futures on May 22 attained a record level of $135.09. There was also a decline in prices this week by 3.7 percent. During the past year, these prices have even doubled, but now the decline has been tremendous, and is now at its lowest drop in a week since March.

“The dollar has a big impact on crude prices. Any shift in the dollar’s direction will prompt investors to look at crude as a store of value,” said oil practice director Rick Mueller, Energy Security Analysis Inc., Wakefield, Massachusetts.