Oil hits high for the year, as S&P goes positive

Today's move can be attributed in a large part to traders reacting to a very strong stock market. The S&P jumped nearly 3.5% today to push it back to about even on the year, and in fact is currently up 0.5% on the year. While we still have a long way to go before we know if we have turned the corner on the current recession, this is a much needed piece of good news for the markets.

Of course, it all really boils down to demand. The basic assumption being that a rising stock market indicates a recovering economy, which will in turn increase the demand for oil. Sounds fine, but it is probably still too early for anyone to really know what to expect the rest of this year.

Every day there is plenty of conflicting good and bad news to keep us guessing, but today's big move was on the heels of the news that construction spending in rising, as well as pending home sales.

While I highly doubt that we are going to have to worry about oil heading up towards the $140's again this summer, it would not be surprising at all to see oil prices continue the recent trend and move higher into the summer months.

This summer we could see a lot more vacation traffic than last summer. Last year people were looking at $4 a gallon gasoline and cutting back on travel. We got used to $4 gas, so now we think $2 is "cheap" and people will pack up the family and head to the beach this summer. It would be hard to imagine demand not increasing this summer, at least where gasoline consumption is concerned.

If I had to guess I would bet that at the peak of the summer we will be looking at oil in the mid to high $60's and gasoline around $2.75 a gallon. What are your thoughts on where prices will be later this summer. Will the recent trend continue, or should we expect a leveling off through the summer?