Limbo Kitty dances to $1.65 gas

Limbo Kitty makes his first appearance of the year as regular gas in my old neighborhood drops below the $1.69 of last November, when Michigan had the cheapest gas in the U.S.  Yesterday, the two stations down the street from the corner in my old neighborhood were selling regular for $1.65.  That's eight cents lower than the last time I checked, when the same stations were selling regular for $1.73.

Will it go lower?  At those stations, probably, as Gas Buddy lists the Detroit average as even lower at $1.62, although it is rising from $1.59 a couple of days ago.  So the second question becomes, "will I see that lower price?"  Probably not, so this might be Limbo Kitty's last dance until fall.  Just the same, I shouldn't be too sad, as gas was a dime cheaper than it was the same time last year and twenty-four cents cheaper than a year ago today, making them the cheapest in the history of this blog.

The seasonal gas price rise should start any day now, but it won't be because oil is more expensive.  Follow over the jump for two stories from Reuters and a video from the Wall Street Journal on oil prices.

In the middle of the day, yesterday's news read US STOCKS-Oil fuels 'schizophrenic' rebound on Wall Street.

Wall Street rebounded over 1 percent on Tuesday, driven by a surge in oil prices and strong quarterly results from 3M, Johnson & Johnson and Procter & Gamble.

All 10 major S&P sectors ended higher, led by a 3.78-percent rise in the energy sector. Crude prices settled up 3.7 percent on hopes that OPEC and non-OPEC producers would tackle an unrelenting supply glut.

With oil at 12-year lows and threatening to put higher-cost producers out of business, investors have been reeling from a turbulent start to the year that has left the S&P down 7 percent from the end of 2015.
...
The Dow Jones industrial average ended 1.78 percent higher at 16,167.23 points and the S&P 500 gained 1.41 percent to 1,903.63.

The Nasdaq Composite added 1.09 percent to 4,567.67.

Oil indeed closed higher with WTI at $31.45 and Brent at $31.80, according to Oil-Price.Net.  Both of those prices were more than a dollar above Monday's closes and five dollars above the price a week ago, when the Wall Street Journal headline read "U.S. Oil Falls Below $27 a Barrel."  That's also higher than the last report, when Brent was $30.31 a barrel and U.S. crude was at $30.48.  However, the price increase won't last, as this morning's report from Reuters reads Oil falls as inventory build dashes optimism over supply.

Oil futures fell on Wednesday, after a surprise rise in U.S. inventories wiped out the optimism that had built up the day before over the potential for the world's largest exporters to cut output enough to stem a 19-month-long price slide.

Another contraction in industrial profits in top commodities consumer China, along with caution before the outcome of the U.S. Federal Reserve's first policy meeting of the year, knocked around $1 off the price of oil.

Oil prices bounced on Tuesday after senior OPEC and Russian officials stepped up vague talk of possible joint action to eliminate one of the largest surpluses in modern times.

Brent crude fell 71 cents to $31.09 a barrel by 1140 GMT (6:40 a.m. ET), having risen by some 3 percent on Tuesday. U.S. crude futures fell $1.09 to $30.36 a barrel.

If oil goes below $30 again, stock markets should drop.  The only thing that will keep the U.S. stock markets from doing so is the announcement that the Federal Reserve is not raising interest rates, although that might already be priced into the market.  If Yellen and company actually do raise rates (a dumb idea), watch the stock markets plummet.

Now for some optimism from the Wall Street Journal: Mary Erdoes: Low Oil Prices Won't Cause Recession

JPMorgan Asset Management CEO Mary Callahan Erdoes says that slowing growth in China and falling oil prices “are not going to cause some kind of global disruption or recession.”

I hope she's right, although we're due for a bear market and recession anywhere.  Here's to hoping that the next recession is like 2001's--not very severe.