Ben Bernanke may not be ready to do QE3D just yet but after some initial disappointment oil turned around and rallied anyway. The upward bias in oil seems to be getting more bullish as strength in the US housing market and a strong industrial production number seemed to add to demand expectations in the marketplace. Oh Sure Mr. Bernanke laid out some options that the Fed might take like QE or lending money out of the discount window and even jaw boning the market about upcoming Fed policy. There are some that believe that Ben Bernanke's downbeat assessment of the US labor market will mean we will get some easing sooner or later. Still Mr. Bernanke is still calling out Washington to get there political act together. As is well known, U.S. fiscal policies are on an unsustainable path. The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery. No Kidding. Ben Said that Recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken, Bernanke said.

Of course the fact that many that the movement towards safety across the eurozone is a fascinating development and as the Financial Times points out there are 6 countries in Europe with negative yields for government bonds maturing in two years or less such as Germany, Finland, Denmark, Switzerland, Austria and Denmark. Perhaps in the search for return oil may benefit.

In China the hopes for stimulus is running high. Bloomberg News is reporting that China's railway infrastructure investment may double in the second half of this year from the first six months, aiding efforts to reverse a slowdown in the world's second-biggest economy. Full-year spending will be 448.3 billion yuan ($70.3 billion), according to a statement dated July 6 on the website of the National Development and Reform Commission's Anhui branch. The document indicates a 9 percent increase from a previous plan of 411.3 billion yuan. Spending was 148.7 billion yuan in the first half. China's fixed-asset investment has already started to pick up and a jump in spending on railway construction would echo the expenditure on rail lines and bridges that was part of stimulus during the global financial crisis. A decline in foreign direct investment reported by the government today underscored the toll that Europe's debt woes and austerity measures are taking on Asia's largest economy

Of course global tensions are also adding to oil prices. In Syria it is being reported that the Defense minister was killed in a suicide bombing at their national security building.

Oil Inventories should be big. The charts on oil look very bullish but I am expected a bearish surprise on inventory! Be patient and do not chase!

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Phil Flynn