Quick Hits: Oil Slippery Hedge Against Inflation
Brief scrutiny of today's headlines.
Oil rose $2.40 to $109.01 a barrel on the New York Mercantile Exchange as investors reviewed details of a proposal to buy bad mortgage debt in an effort to stabilize the US financial system.
It looks like the $700 billion bill will pass Congress, but only after significant changes. Democrats and Republicans alike said the bailout should limit the pay of top executives aided by the plan.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke said neither individuals nor businesses would be able to borrow money if the plan isn't passed - which would bring the US economy to a halt.
Oil investors are reviewing what the bailout plan might mean for the value of the dollar. Some investors are buying crude oil futures as a hedge against the slumping dollar and inflation. The euro fetched $1.4698 Wednesday morning, down from $1.4721.
Despite the recent spike in oil prices, it's still about 26% below the high of $147.27 a barrel reached on July 11. However, the cost at the pump can still make many drivers howl in pain.
Late Wednesday, the US Energy Department is scheduled to release its report on oil supplies for the week ending on September 19. Analysts expect the report to state that domestic supplies increased about 1.6 million barrels. That would be good news for consumers.
Many oil stocks closed slightly down after Tuesday's trading, including ConocoPhillips (COP), Chevron (CVX), ExxonMobil (XOM) and Sunoco (SUN).
Is oil the next bubble?
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