Oil’s Turn

Last week’s declining CPI should have sounded alarm bells for investors betting on the reflation trade and higher interest rates.  However, it marked a buy signal for oil.  Given that oil prices are a primary driver of equity prices, and given that the current YoY picture indicates even lower inflation going forward, it’s time for a boost — which is exactly what’s happening this morning.CL has made a strong move, pushing back above the SMA200 and white channel bottom in a 3.40% pop on news that OPEC hopes to continue “constraining” supply in an effort to reduce inventories and raise prices.

That’s all well and good.  But, the important thing is how the algos react. As the cash market prepares to open, the algos are liking the increase in oil prices very much.

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