All Eyes Remain on Oil Prices and Mideast Instability [Video]

Last week's heavy stream of economic news was largely encouraging, and yet stocks barely eked out gains after oil prices spiked to levels not seen in more than two-and-a-half years. With a relatively light slate of economic data scheduled this week, oil prices and political instability could play an even larger role in the trading sessions ahead, says Kenny Polcari, managing director at ICAP Corporates.

"There's not a whole lot of heavy macro data, so what I think you're going to see is much more concentration on the geopolitical," the veteran New York Stock Exchange (NYX) trader says. "What's going on in the Mideast, what's going on with oil and food prices, I think that's what people are going to be looking at this week."

Thursday brings the regular weekly initial jobless claims numbers, and on Friday traders will get monthly retail sales and the Reuters/University of Michigan consumer sentiment index. But it's unlikely that those figures could be bigger catalysts than last week's spate of encouraging economic news, Polcari says.

Gasoline prices in Key West, Fla.

After all, the Institute for Supply Management indexes were strong, factory orders accelerated sharply, the unemployment rate dropped to a two-year low -- and yet the equity markets managed just the narrowest of gains. The Dow Jones Industrial Average ($INDU) rose 0.3% on the week, while the S&P 500 ($INX) and Nasdaq Composite ($COMPX) each inched up 0.1%.

That's because oil prices nearly overshadowed everything positive -- and could continue to do so for some time. Benchmark crude oil futures traded on the Comex division of the New York Mercantile Exchange (CME) rose nearly 7% last week to close above $104 a barrel. With the Federal Reserve's second round of quantitative easing set to end in June, Wall Street is concerned about the economy's ability to stand on its own, especially if energy prices don't cool off.

"The numbers from last week were very good, and so going into this week you get the sense that the recovery is really happening and people are feeling good," says Polcari. "But I think what you really have to start paying attention to is [the recovery] really going to be sustainable? Can it really be sustained with oil at $100-plus a barrel?"

And, lest we forget, the European debt crisis hasn't gone away, turmoil in Libya continues to churn and worries abound across the Middle East, Polcari says.

"On Friday, we've got this scheduled protest in Saudi Arabia called a Day of Rage," says Polcari. "There is very high unemployment in that country among young educated Saudi men and women, and so it's something they are very concerned about."


For more on Polcari's take from the floor of the NYSE, see the video above.


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March 13 2011 at 9:00 AM Report abuse rate up rate down Reply
Sam Das

O Drama did not create this problem and it wont go away unless we curtail consumption.

March 07 2011 at 9:22 PM Report abuse +2 rate up rate down Reply
ecsnydr

This is just an opportunity for traders to push up the price of oil by the speculators. No mention that Iraq is now producing oil greater than in the past 20 years. Remember when oil was run up to $150 dollars a barrel in 2008? What was the cause them and why did it then go down to approx. $60 per barrel with the sell off after the banking crisis? This appears to be greed on the backs of ordinary Americans, again.

March 07 2011 at 3:33 PM Report abuse +3 rate up rate down Reply
1 reply to ecsnydr's comment
Larry

Just another rip off by the oil companies. The oil that our current gas came from was bought several months ago at much lower oil prices. The oil that is bought now will not be gas at the pump for several months.

March 07 2011 at 2:01 PM Report abuse +3 rate up rate down Reply
bhawkes328

BUT THINGS ARE GETTING LOTS BETTER.... JUST ASK WASHINGTON

March 07 2011 at 11:21 AM Report abuse +3 rate up rate down Reply
1 reply to bhawkes328's comment
fpfp040408

I AGREE 100%. Thank you & God Bless you President OBAMA ! OBAMA 2012.

March 07 2011 at 12:54 PM Report abuse rate up rate down Reply
mookie

THE ANSWER IS TO START DRILLING HERE IN THE US! IT'S ABOUT TIME TO TELL THE ENVIORNMENTLISTS TO GO PISS UP A ROPE. ALASKA IS PLENTY BIG AND THE POLAR BEARS CAN GO SOMEWHERE ELSE. WE NEED TO DRILL HERE! THERE'S PLENTY OF OIL RIGHT HERE. FORGET ABOUT LIBYIA AND START DRILL HERE!! STOP BLAMING OBAMA, WE DON'T NEED TO SEND MORE SOLDIERS TO DIE FOR OIL, THAT'S BUSHS' JOB.

March 07 2011 at 10:56 AM Report abuse -2 rate up rate down Reply
mookie

FUK EWE EXXON/MOBILE!

March 07 2011 at 10:51 AM Report abuse -1 rate up rate down Reply
mookie

THIS IS ALL BS. THE ONES TO BLAME ARE EXXON/MOBILE. SO I SAY TO YOU EXXON/MOBILE, **** EWE!

March 07 2011 at 10:50 AM Report abuse +1 rate up rate down Reply
imme534333

The Obama administration is reluctant to take any obvious action to help rebels in Libya—so it's pressuring Saudi Arabia to do so instead, according to reports. Officials have asked the Saudis to airlift American weapons—paid for by the Saudis—into Benghazi. The Saudis haven't yet responded to the "highly classified" request, even though Saudi King Abdullah despises Moammar Gadhafi, who tried to have the king assassinated last year,

March 07 2011 at 10:16 AM Report abuse +1 rate up rate down Reply