CRUDITÉS

For most of Thursday the dollar looked to be in more command of its destiny. Asian equity markets wobbled overnight after Chinese growth data disappointed some investors who were searching for more. But by the end of the day U.S. equity prices surged ahead once again boosted by strength in corporate earnings. Nevertheless, the dollar coming out from under the hobnail boot under which it's been trapped gave commodity traders reason enough to ease back on the throttles sending energy prices lower.

But crude oil traders found yet another reason to turn coat on Thursday - in their infinite wisdom determined that the recent bout of feverishly higher prices would instill producers at OPEC-member nations to increase output.

The cartel's secretary general said in London on Thursday that OPEC members may raise production in order to maintain prices within an $80 - $75 per barrel range. The last time OPEC boosted output to depress prices was September 2007. The tricky part here is that demand conditions today are vastly different to back then. In those days, demand was through the roof although no one could foresee the impending economic crash.

Still it was only late in the day that rising equity prices, signaling recovery and increased appetite for risk, that crude oil prices recovered as the dollar once again fell against the euro where it closed late in New York at around $1.5025. Meanwhile crude oil for December delivery having touched $82 per barrel midweek closed at $81.19 for a daily loss of 18 cents.

In order for OPEC to mandate increased production, stockpiles of crude and gas will have to continue falling further. Yet U.S. fuel demand dropped in the last week by 1.4%, which is a mysterious occurrence as prices rise. Diesel and heating oil both as distillates saw a 2% demand drop.

We'll probably never learn how much speculation is driving prices up by in this current tepid recovery, yet the art of good trading is to trade the trend, which as far as energy goes is still up, while that for the dollar remains lower.

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