PHRASEOLOGY BEATS THINKING

Crude oil prices registered their best levels in a week as the IMF improved its outlook. Additionally, API posted a larger than expected decline for crude stocks. Brightening an improving economic picture was the falling number of Americans applying for jobless benefits last week fell to 454,000.

Labor Department data last week showed companies in June disappointingly hired fewer workers than forecast. As the IMF said in its report, “Recent turbulence in financial markets -- reflecting a drop in confidence about fiscal sustainability, policy responses, and future growth prospects -- has cast a cloud over the outlook.”

This is the crux of the problem facing any expansion in energy demand, actually the economy as a whole. Getting people back to work and restoring consumer confidence. Right now the former is moving glacially, and the later still severely hampered.

However, with most industrialized nations pursuing monetary policies which keeps rates near zero, international entities like the IMF and others may need to expand their balance sheets, with the consequence of negative political consequences. A very tough place to be, with very little maneuvering room. The financial press yammering for a "double-dip" stacks the deck even more.

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