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The following article examines the current oil economy in consideration of the release of emergency oil reserves by the IEA. The IEA had released its emergency oil reserves in the oil market to make up for the shortage created by the ceased supply of Libyan oil. This measure was shocking to the oil economy and created a sell-off of 6 percent in the oil market. The IEA is now set to declare the results of its 30 day review of the release of emergency oil. It is forecasted that another such release is to be expected before the year is through. While some nations are in full opposition of this measure others are reluctant to take any action in the immediate future. The US could release more oil to the market regardless of the decision of the IEA. The United States alone released about half of the 60 million barrels in the international oil market. This was only the third time that the oil reserves were released by the IEA in its 37 year existence. The negative relation between the US currency and oil prices was highlighted as the dollar index rose by 0.9 percent on the day. Oil prices since then have stabilised with Brent crude rising to 116$ against it previous 114$. The year 2009 saw sustenance of the negative correlation between the US currency and prices on oil. Economic growth was boosted with the provision of cheap money as the world crawled out of recession. This weakened the US dollar but drove to mass buying of assets by non US currencies. Specifically, dollar denominated products such as oil became easily available to holders of other currencies. A weak dollar might cause the OPEC members to raise the oil price to protect its own dollar income. The quantitative easing by the US during its second round aided in maintaining a sustained oil market. It gained impetus after the supply of oil from Libya was halted due to the civil war. The chairman, Ben Bernanke of Federal Reserve has suggested further quantitative easing if the inflation and economic growth lacks speed. This measure might further weaken the US dollar. The negative aspect between the US dollar and oil could be somewhat curtailed if the sentiment in the market is that rising all prices are hampering demand, particularly in the United States. The United States is the largest market for oil but sports a feeble economy. The performance of the US dollar against other currencies was considerably weak. Further quantitative easing might prove too much a strain for the US weakened dollar. Kyles Humphrey is an knowledgeable author in oil connected fields, which frequently produces content articles related to essential oil prices & spiders and also crude oil including tips on expense within oil. Check out oil.com for more details.
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