For most of the year, oil played a dance with the dollar. If the dollar rose, oil fell; if the dollar fell, oil rose. This summer the dynamic changed. Equities were now playing the tune to which oil must dance. However, the reality is that the economy has not significantly improved all year and demand has increased insignificantly while inventories are at twenty year highs and refinery utilization is at lowest rates in some time. The fundamentals have been weak all along.
The bad economic news now has caused a decided downward trend for oil. All the talk of whether Asia, read China, would somehow increase global demand does not tell the full story. China cannot export to a faltering America. They cannot grow their economy organically without demand from the rest of the world.
For the week, crude -$1.88, $73.45; gasoline -1.56¢, $1.925; distillate -2.33¢, $1.9715.
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