"Oil prices have fallen lately. We include this news for the benefit of gas stations, which otherwise wouldn't learn of it for six months." -- William D. TammeusDuring his July 12, 2008 Moneytalk show, Bob Brinker said:
"Now I wish I could tell you what the price of oil is going to be in a week, a month, a year. I don’t know. I have no way of knowing and I think only a fool would try to forecast the price of a barrel of oil in the world we live in…….”The price of oil, West Texas Intermediate crude (more WTIC Charts) specifically, broke its steep 2008 support level (dashed green line in graph below) last month. Currently oil prices are testing the 20-month support line (dashed blue line) from the start of 2007.
Bloomberg: Oil Steady After Falling on Signs Fuel Use Decline Will Spread
- Gasoline demand was down 2.1 percent through July as record prices and slower economic growth cut consumer spending.
- "The market is much more focused on demand destruction than on supply concerns,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. "The concern now is that the demand destruction in the U.S. will spread like a virus to other countries.''
The chart below clearly shows the stock market has been led by problems in the financial sector, not the price of oil. The price of oil is an important variable in corporate profitability and consumer spending, but there is no direct correlation.
These charts make it easy to see the the stock market rallied early in the year as oil prices went up and it fell as oil prices continued to rise. The direct correlation is between the S&P500 and XLF, not oil prices.
In his August 2008 Marketimer, Bob Brinker said:
"We believe a good case can be made for oil prices to trend toward the $100 per barrel level into 2009."If the stock market continues to rally and oil prices break support, then Bob Brinker's latest buy level may have come too late. (I'd rather not be the first to give this new "All-In Buy Level" number in respect for his paying subscribers.)
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