The global markets are getting ready to get pumped up on hopes of massive stimulation across many continents. Reuters News reported that the official Chinese Newspaper Xinhua quoted Chinese President Hu Jintao as saying that China would increase fiscal and monetary policy in the second half of the year.

Of Course that follows the Mario Draghi pledge heard around the world that he would do whatever it takes to save the Euro. Of course now the question is whether or not he rayed expectations higher than he can actually deliver on.

That also put more pressure on Fed Chairman Ben Bernanke as he and his merry band of Fed governors meet to try to decide whether or not to acy aggressively to combat a slowing economy. Obviously with the EU seemingly ready to act and the Chins hinting they may act as well is it possible the Fed will be forced to do their part. Or will Ben stand firm and wait to see what happens next. It seems that before the Fed acts Mr. Bernanke wants to see Europe act first.

Of course the slowing global economy and deflationary fears took a tool on oil prices and actually improved demand. According to the Energy Information Admistration (not to be confused with the EIA which I did by mistake last week Mea culpa!) demand for oil increased in May. David Bird at Dow Jones wrote that U.S. oil demand in May rose 1.9%, or 344,000 barrels a day, from a year earlier to 18.707 million barrels a day, revised government data released Monday show. The gain, led by a 2.4% jump in gasoline demand amid sliding prices, was the first year-on-year rise in the world's biggest oil consumer since March 2011 and the largest since January 2011, data from the Energy Information Administration show. Prior to the rise reported in the May data, U.S. oil demand had fallen by an average of nearly 550,000 barrels a day in the 13 months beginning in April 2011. Total demand was the highest in any month since February and was up 424,000 barrels a day, or 2.3%, from the April level. The revised May demand figure was 0.8%, or 142,000 barrels a day, above preliminary demand estimates for the month. Demand for gasoline, the most widely used petroleum product, rose by 212,000 barrels a day from a year earlier, to 8.996 million barrels a day, the most in any month since June 2011 and 2% above the April level.

The year-on-year rise in gasoline use was the biggest since September 2009, EIA data show. The jump in gasoline use at the start of the summer driving season followed a slim 0.6% year-on-year rise reported in April. Prior to April, gasoline use had fallen by an average of 260,000 barrels a day from the year-earlier level over the previous 13 straight months, a time when prices were rising sharply. The national average retail price for regular gasoline was $3.732 a gallon in May, down 4.5% from a year ago, and the lowest monthly average since February.

May's average retail gasoline price showed the first year-on-year drop since December 2011 and the biggest decline since October 2009. The drop in May of 4.3% versus April was the biggest month-to-month price drop since June 2011. Part of the large jump in year-on-year gasoline demand in May can be attributed to extremely weak demand a year ago, the EIA said. May 2011 gasoline use was at a 10-year low for the month, as retail prices were 38%, or $1.07 a gallon, higher than a year earlier, Tancred Lidderdale, EIA analyst noted. The May 2011 average pump price for regular gasoline, at $3.906 a gallon, was the third highest on record and the most since the peak average of $4.062 a gallon in July 2008.

Amid stronger domestic demand, gasoline exports dropped 15.1% in May from April, to average 343,000 barrels a day. Exports dropped 23.3% from a year earlier, to the lowest level since July 2011. Exports to Mexico, which make up half of U.S. gasoline exports, dropped by more than 100,000 barrels a day from a year earlier, to 172,000 barrels a day, the lowest level since October 2010. May demand for distillate fuel increased 2.4%, or 88,000 barrels a day, from a year earlier, at 3.745 million barrels a day. That's the highest since February and a three-year high for May.

The bulk of the rise in distillate use came in demand for ultra-low sulfur diesel, used to run trains and trucks, which rose 77,000 barrels a day, or 2.3%, from a year earlier, to 3.445 million barrels a day. That figure is the highest ever in May and the most since November 2011.

Retail diesel prices in May averaged $3.979 a gallon, 1.7% below a year ago and lowest monthly average since February. Demand for jet fuel fell 1.4% from a year earlier, and was the weakest in May since 2009. But, at 1.409 million barrels a day, jet fuel use was the highest in any month since November 2011.

Demand for heavy residual fuel oil, used in industrial boilers and for power generation, continued its steep decline amid strong competition from natural gas on environmental and economic factors. Residual demand of 294,000 barrels a day in the month was the lowest on EIA records beginning in 1936 and was 38.5% below a year earlier.

Of course while the recent break in oil prices helped spur gas demand kit did take a toll on profits for some oil companies especially BP. According to Dow Jones reported that BP posted a dramatic fall of 96% in adjusted profit for the second quarter as it wrote down the value of its assets by $5 billion, including some U.S. refineries, a suspended Alaskan oil project and U.S. shale gas resources. Excluding these one-off costs, analysts said the company's performance was still weak as it continues to suffer the long-term effects of the Deepwater Horizon oil spill. BP shares dropped sharply in morning trade after the company said its replacement cost profit, a headline figure that strips out gains or losses from inventories, fell to $238 million, from $5.41 billion in the same period in 2011. The London-based energy giant's bottom line made for even more somber reading as it posted a net loss of $1.39 billion, compared with a net profit of $5.72 billion a year earlier.

Now perhaps some of the politicians that whine that oil companies make obscene profits should realize that what goes up can come down. Maybe we should lower oil company's taxes. It is only fair to call for a cut in oil company tax because when their profits are high politicians call to raise their taxes.

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Phil Flynn