WEDNESDAY AUGUST 19, 2009

Oil up...Equities up?

An interesting trade occurred in the markets today. Energy statistics released today showed that inventories for crude oil and gasoline declined in the last week. The price of a barrel of oil traded up $3.15 to $72.34. That is not surprising given the inventory news. What is surprising is that the Dow Jones is up 57 points based on the same news. When did higher oil prices become good news for the equity market?


 

Equity traders are looking to the commodities markets for signs that the fledging economic recovery has legs. The logic seems to be that if demand for oil (and other commodities) is rising, then economic activity must be accelerating. At least that is what works for logic today. If oil prices continue to rise, look for the logic to be that higher energy prices will kill the recovery.   

POSTED AT 1899-12-30 16:00:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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The opinions expressed here do not represent the views of Alliance Financial Corporation and Alliance Bank, N.A. This communication is not an offer or solicitation for the purchase or sale of any security, is for general informational purposes only and does not provide personalized investment advice. When making personal investment decisions you should consult your investment adviser or rely on your own research. Copyright 2008.