Burning Oil

Out where the river broke
The bloodwood and the desert oak
Holden wrecks and boiling diesels
Steam in forty five degrees
--Midnight Oil

Last week the price of crude oil cratered nearly 20% and has given back its gains since mid 2009.

Some link sharply lower oil prices to improving production technologies, particularly those developing in the US, with goosing supply comfortably above demand.

Others attribute collapsing oil prices to a pending global economic slowdown. Less demand for crude means less demand for production-hungry energy, so the story goes.

Some also view commodity volatility as a predecessor to equity volatility. However, one has to look hard to find much evidence of crude being a leading indicator of trend reversals in equities over the past decade or so. What is readily apparent is that stock prices have generally lost any semblance of historical correlation with oil (or with most else for that matter) over the past year or two.

position in crude, SPX