Oil continues to climb…

Between lack of investment in exploration and production, as well as increased demand form developing countries (India/China), oil prices should continue to rise over the near term. This continued rise in prices could translate in slower worldwide growth. A German newspaper reported that the IMF sees these record high oil prices becoming a bigger risk to global growth. “All in all, the dangers have become greater”. The fund in an upcoming report cited a lack of refining capacity as a big reason for the higher prices. A slowing U.S. economy (currently one of the few economies growing significantly) would have drastic effects on world growth, which would translate into a realignment of the dollar. Asian currencies would come under pressure (we have seen the beginning of this already) and interest rates would come off.