It is the last full trading week of the year and markets are ending things on a high note. Wall Street has seen its biggest boost over a two day trading period. The S&P is 1% from its striking distance of its all-time high. Brent crude is above the key $60 mark, up 1.3% at $60.04 a barrel. This was a slight rebound from what was very close to a 5 1/2 year low. WTI is also up 1.3% at $54.83.
The Russian ruble saw somewhat of a dead cat bounce today as it climbed 5% this week considering it lost nearly 60% in just six months. This is no indication that Russia is out of the doldrums and won’t see any further hits to their currency, it just means that there was a gasp for air in the midst of the crisis.
The $60 threshold for oil seems to be the psychological barrier where markets will react one way or another. If we see $60 hold up for some time, we can start to base some assumptions as to the support of everything else that is dependent on oil. The reality is, this quick snapback is not an indication that we are not going to see further leg downs before an upward or sideways trend continues.
Look for what will happen to U.S. oil producers and if these companies are going to be able to keep their doors open while the price per barrel are at these depressed price levels. Since the U.S. has experienced a shale oil boom, this has created many jobs and has been the catalyst for many local economies.
If profitability goes away for these companies, we could see a contraction in the overall economy as well as severe recessions in states dependent on oil production.
Until then, enjoy paying lower prices at the pump!
Chief Editor at CrushTheStreet.com