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The Debt Crisis is Deep and Ominous

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From Kamar:

Fear of the Sub-Prime Crisis
By Phil Flynn

Oil demand is surging! Gasoline demand is at record highs! You would think that the oil bulls would be dancing in the streets! Yet despite these stellar numbers and incredible demand numbers there are dark clouds on the horizon. There are fears that the future might not be so bright. Why? Well because there are fears that the so called sub-prime crisis will start to cause economic blight. Demand expectations for the future are falling and fuzzy. How long will it take for this sub-prime crisis to take a chunk out of energy demand? How do we predict how hard and how fast this will hit demand? How much of the slowdown has already been priced in and could this crisis present a great opportunity to make a big move in oil?

Forget about supply and demand; the new indicator for oil is the direction of the stock market. Oil has been tracking the stock market and at times moved with it tick by tick. In fact it was so close that I thought I was watching a new stock market index called the Crude Oil 500 or something. When stocks went lower on news that home sales hit a five year low the oil followed. But then later when the stock market recovered the oil rallied as well. Oil is afraid that demand will evaporate in the future but if they overestimate the magnitude of the slowdown we could see tighter supplies and much higher prices. And whatever your opinion as to how bad the sub-prime crisis really is, it should lead to a big rally or break in the oil market shortly.

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