Oil, Gold and the Dollar

Here's an interesting story about oil from Barron's ...

Gas Price May Be Summer Bummer

While refineries were able to crank out an additional 100,000 barrels per day versus gasoline production in the week-ago period (thanks to the use of refinery unit downstream from the distillation tower), refiners remained incapable of expanding utilization: For the week ended June 8, refinery utilization totaled 89.2%, down 0.4% from the previous week and below the year-ago level of 92.7%.

With several refineries still down due to planned and unplanned maintenance, and hence, the industry's inability to maintain a utilization rate above the 90%, we reaffirm our view that record low gasoline inventories leave the domestic-refining system and gasoline consumers vulnerable to upward gasoline-price volatility as we progress through summer.

There are two things weighing on the US dollar now – rising gas prices and a crumbling housing market. You’ll notice I haven’t put the trade deficit in there because the trade deficit hasn’t mattered … yet. If these trends continue, the US dollar should go lower and gold should go higher. If the trade deficit starts to matter, the dollar could get shellacked.

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