What's Moving the Oil Markets?

•Crude futures markets surged Friday building on the momentum generated late Thursday evening, with further buying apparently triggered by every half-dollar rise, markets sources said. NYMEX WTI has gained over $8/b in less than two days, with Thursday seeing a record rally on crude futures. Prices moved up by more than $6/b--the largest one-day gain in absolute terms ever recorded.

•Opinion was mixed about the influence of the weakened US dollar.The weak dollar was certainly on everyone lips Thursday following comments by European Central Bank President Jean-Claude Trichet. "[Thursday's] move was attributable mainly to a weaker dollar, which slid by a full euro over the course of the day after the ECB left rates unchanged and indicated that it may have to raise interest rates to fight inflation," MF Global's Ed Meir said in a daily report. "This, in turn, sparked a short-covering rally in crude, although interestingly, the dollar failed to ignite the commodity complex as a whole; base metals closed mixed, while gold actually finished lower."

•Friday's buying appears to be mainly technical in nature. "It would be easy to summarize why the market is firming today by just pointing at the dollar," the trader said. "Dollar down and oil up, it can just be a convenient justification."

Updated: June 6, 2008