Today the Crude Oil Inventory report was released showing a build of 128,000 bbl. Crude oil briefly touched $75/bbl in trading early this week and is retreating from that number. It is perhaps the most telling aspect of this "recovery". Demand was down, is down and will be down the economy while not dead is in bad shape and will be so for a good deal longer.
The price of oil is up, way up from it's lows of $35/bbl. There are (2) reasons for this... First, Chinese consumption is rumored to be up although I'm of the mind that they are diversifying out of T-bills and stockpiling oil which is much less likely to default. Second, it is a tangible commodity with real world value making it a reflection of the perceived future value of the US Dollar, the currency it is priced in. If the market thought the "future" US Dollar had some hope oil prices would be much lower.
Here is the problem, We are looking at a devalued dollar which is good for exports and managing our national debt but there is no free ride on this train. The downside is that because of the weak dollar we will be looking at higher interest rates and energy prices....the birthplace of "Stagflation". Welcome to the future, it looks a lot like the late 70's.
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