Oil into the danger zone on Libya
For the first time in recent memory the stock market is worried about high oil prices. Equities finally took notice of a commodities market screaming out to be recognized. The rising oil price suddenly isn't as amusing as it was in the last few weeks as traders attributed any increase to growth in China or the intoxication of the bottomless barrel of economic stimulus that was intoxicating to stocks as it was for oil.
Yet now the historic wave of change in North Africa and the Middle East is the type of stark reality check that can knock a stock market out of its bullish compliancy. For the first time since this wave of revolution born of discontent and rising food prices and terrible economic conditions, we have actually lost some supply of oil products. A force majeure was declared by Libya and a reduction in Libyan oil production sent prices soaring.
What the market place is telling us is that not all rallies in the price of oil carry the same risk to the economy. In fact, sometimes a rising oil price is the best indicator of economic expansion. Yet other times, as is the case with the Madman Gadhafi, perceptions are sometimes altered from reality.
Oil prices tried to regain some confidence after some reassuring words from the "Granddad" of the OPEC cartel Saudi Oil Minister Ali Al-Naimi who assured us that he and his buddies in his evil cabal would be more than happy to exploit these higher prices. Ok, maybe he did not quite say it that way, but he assured us nonetheless that the world would not be in want of oil. Of course the way things are going in that part of the world, who knows if he's going to be in charge next week. The International Energy Agency also tried to calm fears by making some statements.