U.S. equity and bond markets were closed in observance of Dr. Martin Luther King's birthday. Many U.S. investment banks were very lightly staffed Monday.

Bearish sign

Independent energy trader Jim Dietz told BloggingStocks Monday afternoon that the fact that oil declined substantially despite a winter cold snap in the northeast U.S. is a bearish sign for oil.

"Typically, cold weather in the northeast United States supports oil's price because that's where a lot of heating oil is used. The fact that it declined $2 Monday despite frigid northeast weather is a bearish sign for the oil markets," Dietz said from his home office. "Traders are repositioning themselves given what many feel will be a slowdown in the increase in oil consumption, driven by a global slowdown and a possible U.S. recession."

Dietz, who has no daily trades open, but several monthly oil-short trades open, said oil's decline and the broader European and Asian market declines Monday suggest a rough start to equity and energy trading when U.S. markets open Tuesday morning.

"Few in the energy markets, at least few people I speak with regularly felt we were done with the negative announcements on subprime mortgage defaults. Most expect additional write-offs relating to these mortgages and their assets, it's just that up until now, global growth was seen as chugging ahead, which supported oil's high price," Dietz said. "Now, it appears markets in Asia and Europe are sensing they'll be affected by any U.S. slowdown, their markets are factoring that in, and it's driving oil lower as well."

Dietz said he sees oil testing $75-$80 per barrel by early spring, with the U.S. national average for unleaded regular gasoline dropping about 20 cents to $2.75-$2.80 per gallon, as well.