When the greatest oil spill in decades doesn't cause oil to rally, you know if you are a bull that you are going to have some problems. Still, there were others happenings to consider.

The mysteries of the smoke and mirrors of economic stimulus seemed to be revealed in the realities of growing sovereign debt. Yesterday as the markets questioned the realities of the Greek bail out, they seemed to realize that this was not the end of the story but perhaps only the beginning. Worries about the moral hazard of such a bailout and the realization that Greece's partners in the ignominious acronym PIIGS - Portugal, Italy, Ireland and Spain - could soon be at the trough of the EU for their cash bailout, raised concerns in the market place that a new front has opened on the economic crisis. Overnight German Chancellor Angela Merkel said that Europe was at a crossroads and its future depended on helping Greece emerge from its debt crisis. According to Marketwatch, Merkel appealed to the Bundestag lower house of parliament for approval of the aid by saying that the financial aid for Greece must be approved in order to secure the stability of the euro and avoid contagion to other member states.

Now if you add to that some evidence that the Chinese economy might be slowing down as evidenced by a surprise slowdown in the HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity which fell to 55.4 in April from 57.0 in March. Also consider that Australia raised their interest rates and put a high tax on miners. So the countries that seemed to be leading us out of the recession are showing signs that they might not be able to carry the load. The Reserve Bank of Australia raised its benchmark interest rate by a quarter points to 4.5%, saying inflation will move into the top half of its target 2% to 3% of its range. Australia also shook up the commodities markets by slapping a 40% tax on the profits of mining companies. Short term that was an act that may slow the Australian Economy more than an interest rate increase and has the rest of the world wondering if this is the right time for a whopper tax at a time when the global economy is struggling.

All of these worries helped tank the Euro and believe it or not, the Aussie dollar. The Aussie fell on fear that the Reserve Bank of Australia may stand pat for awhile on interest rates and that the heavy tax on miners may hurt Australia's economy. Of Course when to market starts to worry about all the props that have been propping up this market it is forced to focus on the supply side which when it does, is overwhelmingly bearish. The American Petroleum Institute added to that bearish sentiment by reporting builds in every major category of supply.

The API reported that crude oil inventory increased by 2.95 million barrels and those distillates by 1.37 million barrels and gasoline by 1.46 million barrels. Not exactly a sign that supplies are tightening.

Long term we are seeing signs that the spill in oil is having an impact. We are seeing the price of oil in the back end of the curve rise as the market is pricing in a setback on US offshore drilling. We saw oil trade above $100 a barrel in the 2018 contract and are offered above $100 in the Dec 2013 contract. It is obvious that the market is assuming less oil in the distant future because of this accident.