Oil producers, energy-sector lenders and their faithful cheerleaders in the news media got all lathered up the other day when crude futures briefly closed above $50 for the first time in more than two months.  The Wall Street Journal noted wishfully that this was the ‘latest sign of renewed confidence in the oil market’.  In fact, it was merely the latest sign that those who pray each day for signs of inflation are growing increasingly desperate for solid evidence. In this case, anyone who can read a chart would have puzzled over their enthusiasm, since the big picture shows only a series of lower peaks and lower lows that are the hallmark of a bear market that in this case has persisted since January.

A note to anyone in the news media who might be reading this:  Bull markets in energy are not caused by supply quotas or spun stories about falling inventories, as oil producers might hope, but by the robust expansion of global manufacturing. With all due respect for Boeing and a couple of other big players who have been enjoying strong business this year, nothing of the sort is occurring.  The supposed economic recovery in the U.S. is the most sluggish in history, and Europe’s is even more tepid.  As for China, whose demand for oil effectively determines its global price at the margin, internal economic froth cannot mask the slowdown that has occurred in manufacturing. In such an environment, the hoped-for rise in the price of crude to $60 a barrel is most unlikely._______ UPDATE (Aug 6, 6:30 p.m.): However bearish we are on crude’s long-term prospects, a pop above 52.38 would turn the weekly chart bullish. I have my doubts that buyers will be able to muscle this cinder block to that benchmark in the week ahead, but that doesn’t mean we should ignore them if they try.