Oil Price

Oil has been playing peek a boo in the $70 -75bl. range for several
months now. We are into a period of serious seasonal weakness for
oil, so it is noteworthy the price is holding up. The strength in the
price in recent days has boosted the relative stock price performance
for the producer group.

One concern I have here, which is not tangential to the interests of
oil price players is that if oil does break above $75 a bl., it will have
the effect of reducing the longer term performance potential for
the economy. A rising fuels bill could well put some pressure on the
real wage, and it would force consumers to borrow more to maintain
discretionary spending. Down the road this little series of
connected dots could work not only to moderate economic demand,
but demand for petrol as well. Suggest you keep this in mind.

Oil chart.