I have confidence in sunshine, I have confidence in rain, I have confidence that spring will come again. But confidence in the economy may knock the confidence out of me. Strength may not lie in numbers but the numbers are not showing strength.

What can only be described as a stunning drop in consumer confidence went a long way in shaking the confidence of even the most steadfast bull. The Conference Board, after reporting an increase in consumer confidence last month, posted an ignominious drop from a lofty height of 56.5 reading in January to a pathetic 46.0 reading in the month of February. What made this number feel even worse was it followed weak business confidence numbers in Germany leading to worries that Europe's credit woes are having an impact on the business climate throughout the region. The IFO business climate index in Germany fell for the first time in eleven months, to 95.2 from 95.8 in January, below economists' forecast of 96.4 as concerns over Greece debt issues are taking its toll. These dual concerns gave a rise to the dollar and put pressure on commodities across the board as oil seemed to lead many commodities to the downside.

Oh sure it helped that it appeared that the strike in France is over and that the refinery shutdown was going to be settled. The Wall Street Journal Claire Rangel reported that Total said, it had concluded talks with trade unions at its French refineries that could lead to the end of the strike that began over a week ago. The French oil major pledged to preserve refining operations in France for five years. Refinery workers were angry over plans by Total to end refining operations at the sprawling Flanders facility near Dunkirk, which the company committed to keeping open in some form or another. However, Total didn't disclose its intentions for the refining operations at the site, which houses other activities. This is bearish in two ways. One is obvious that France will be refining product. But the other bearish activity is not as obvious. Increased French refining activity will add to the global glut of refining capacity. The problems with North Sea production and the Buzzard Oil field is an issue that the market can look beyond. Reuters News, quoting a source at the company, said that the North Sea Buzzard oilfield has started to increase output after a period of much diminished production. With production coming back, that will be one less thing that the bulls can hang onto.

Yet ultimately it was the drop in confidence that was the major factor in the big drop in oil. Let's face it, even the oil bulls have to admit that the price of oil is being supported by confidence as in confidence that the economy will recover at steady inflation free pace and that demand in China will continue to reduce global oil inventories. Or perhaps confidence that OPEC will get back to being compliant in production cuts. Or confidence that the dollar will stay weak forever. This would allow an inflated oil price due to a weak dollar as opposed to traditional measurements of supply and demand. But if that confidence is shaken then oil will tumble.

I have confidence in spring time! And so does the natural gas market that has declared that for all intents and purposes spring has sprung. Natural gas continues to get pummeled ahead of today's March expiration. Another sign of spring is melting snow. The snow melted and that had people feeling confident to go back to their cars and drive! The MasterCard SpendingPulse reported that gasoline demand rose 5.8 percent last week after last week's snow induced 16-month low. The report showed demand at an average 9.36 million barrels of gasoline a day.

We are still maintaining our long term bearish outlook for petroleum. We see oil going down to the $40 region. Iran is still a concern as it appears sanctions are on the horizon. Still we feel the path of least resistance is to the down side. Call for the latest updates at 800-935-6487 0r email me at pflynn@pfgbest.com to open your account. And see me each day on the Fox Business Network!