Thursday, June 14, 2007

Oil breakout

Oil has now broken out of the 2 1/2 month consolidation phase to the upside. Well it has as soon as the daily chart updates. (I'll update the chart as soon as the data changes) I will be watching this closely. Author Stephen Leeb notes that when energy spikes rapidly in a year it almost always brings on a recession. If oil can get to the $85 - $90 level this summer I think the economy is going to be in trouble. This is part of the problem when central banks inflate the money supply. Eventually the extra money will find it's way into commodities. Throw in the fact that the world hasn't found a giant oil field or built a refinery in 30 years and you have the beginings of an energy shock. Stay tuned.