Thursday, May 31, 2012

Price of Oil in Euros

Because Oil is a commodity that is typically priced in dollars, Americans have benefitted from a declining price of crude  in recent weeks as the dollar has risen against the Euro.  WTI crude especially (which is the most frequently quoted price of crude in the US) has fallen below 90.

On the flip side, the Europeans have been hit by a double whammy when it comes to crude prices.  Not only has Brent (a more appropriate European price proxy) traded at a significant spread to WTI, but also the weakening Euro has meant that Europeans need to pay more for a barrel of oil.  In fact, the price of oil hit an all time high in March in Euro terms and has fallen by less than it has in the US in recent weeks.  WTI priced in dollars is down by 16.5% while Brent priced in Euros is only down 11%.

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