Sometimes in life your right, and hopefully I am at this point in regards to oil.  In my last few blog posts I've been suggesting that oil is going to soon be dropping to more manageable levels.  It hit the peak recently and has in the past few days began to drop and drop and drop.  I can just hear George Soros rubbing his hands in glea as his short bet's are making him BILLIONS of dollars.

This has been one of the biggest sucker plays in recent history.  I'm wondering when the SEC is going to announce an investigation of commodity investors who ginned up the cost of oil by spreading false information to drive up the cost of crude.  Don't tell me it doesn't happen, because there in a middle of an investigation already with finance companies.  I'm not saying that demand has not had any bearing on cost's going up, but let's be intellectually honest.  Anytime anyone sneezes in the middle east, and the future market goes nuts.  We have reports of expanding inventories and as you'll see in the AP Article, some expert is going to claim that the rest of the world is not conserving, so we're going to see further increases.  They don't want the party to end, much like real estate agents and government officials did not want the real estate party to end.  But what comes up comes down, and the higher these investors drive up the cost of oil, the harder it is to maintain that price due to lessening demand pressures.  The foreign demand will shrink after the Olympics.  China has already suggested that oil subsidies are going away.  How much longer will other countries be able to handle subsidizing oil?  When this goes away, look at demand dropping in these countries as well.

So Wall Street is happy that energy cost's are looking more manageable, which is of course telling you that they are not as worried about inflation as they would be if oil demand had not changed.  It's also telling you that oil money is now moving back into the market as well.  I know there are other aspects of today's rally, such as the Morgan Stanley news, but hopefully this is the start of good things to come.

Market reaction to falling energy costs

AP NEWS REPORT ON OIL

OH By the way....One reason we may not have to worry about oil demand in China...read this if you want to know more...

China headed for recession.