I'm talking about the spike in oil recently... Who'd of guessed? A diabolical plan to increase the cost of oil while a Bush is in the whitehouse...?
Oil is a hedge against inflation. Oil is traded in dollars so when the dollar drops oil becomes a more attractive investment for those trading in foreign currency.
The FED cutting its key rate increases the likelyhood that the value of the dollar will drop. When the value of the dollar drops investors world wide rally around oil and the cost per barrel soars.
The FED Funds rate cuts did not help the consumer, they did not help the housing market and they certainly are not helping the financial markets but oil is doing just fine.
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