In the tumultuous aftermath of the US downgrade from S&P, the world also is downgrading the oil market. They are doing this not only from a demand standpoint but also from a safe haven stand point. While Europe goes to the printing presses and the US Treasury Secretary lashes out, oil traders wonder why they should hold oil as global economy looks like a total mess. There is no choice in their minds but to significantly downgrade demand expectations.

While the US downgrade is creating uncertainty, it's really the problems in Europe that is having traders sell the crude oil market. Gold is the knee jerk safe haven and it appears that some money that was held in oil for safe haven purposes, has fled that market in favor of the yellow metal as odds of global money printing continues to rise. Despite the near term we still see another round of money printing. The question really is whether global central banks have enough ink to save the global economy.

Is Italy and Spain too big to bailout? Allan Greenspan thinks so. Well the ECB is going to say that now as they move swiftly to inject cash after an ugly opening. Italy looks like it is going to get a balanced budget amendment before the US does.

The US Treasury Secretary lashed out at S&P like a third world power saying that S&P has really shown terrible judgment. China on the other hand says the US has shown terrible judgment. China, the great currency manipulator and stealer of intellectual property, said that the United States has to "cure its addiction to debts" and "learn to live within its means". China said, "short-sighted political wrangling in Washington" has created a situation to undermine the global economy." I am sure they are wondering why we did not throw the dissenters in prison.

"China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets. If no substantial cuts were made to the U.S. gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way."

Yet we know that for oil bailouts are bullish. If US stocks panic then the odds of QE3d go up and that could cause a big rebound. Gold believes the money will be here and the dollar will be weak. Still if we see a QE3d announcement oil should rebound.

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