Light Crude Ignites Wall Street

Fears of a recession in the first half of 2007 - a subject of wide speculation - were put aside for today as one of the world economy's most deliberate drivers - crude oil - tumbled as the warm winter in the US Northeast (home to 1/5th of the US population) continued unabated into the second week of January.

Call it Al Gore's Unintended Consequence if you like, but the effects of Global Warming have been a prime mover of Wall Street's good fortune. In what can only be described as a non-virtuous cycle, in which the major precipitator (large industrial corporations which emit greenhouse gas) of Global Warming is currently the recipient of the short-term positive fallout (lower oil prices, fatter profits). The long-term consequences may not be so pretty, but that's a story for another day.

The price for a barrel of light sweet crude oil fell below $52 today, settling at $51.88, and Wall Street responded with a record high close on the Dow and massive gains on the other indices.

The Dow added 72.82, to close at 12514.98, 4 points better than the previous record closing high. The S&P 500 added nearly 9 points; the Nasdaq was up another 25.52, achieving a 6 1/2 year high.

With a the bulk of US corporations reporting quarterly results in the next two weeks, the January effect is beginning to look a little rosier than it has at any time this year. While it's still very early, the indications are moving in a positive direction. Before joining or continuing the party, bear in mind that volume was rather weak and the volatile situation in the Middle East could wreak havoc on today's oil price phenomenon.