Nationwide gasoline prices begin today at $2.37 gal, up 23cts gal in the last month, and some 13cts gal higher than last year. All Pacific Coast states have surpassed $2.50 gal, and California averages have trumped $2.83 gal.  The last of the sub-$2.00 gal numbers have disappeared in virtually all hamlets and metro areas.  Retail is moving higher in the next ten days - - that is a certainty.

  But the bull run in oil futures and spot prices may be due for a respite or a severe test in the next few days. It takes a strong economy and stable financial markets to sustain higher oil prices. There is a myth that oil prices and the Dow or S&P move in inverse fashion. That’s nonsense. More often than not, oil prices rally on the back of strong economic data.

   The Chinese stock markets have dropped by nearly 10 percent overnight thanks to talk that the government may take steps to temper speculation. S&P futures are trading some 11 points lower and the Dow has flirted with 100 point losses ahead of the opening. A report on durable goods showed a much larger than expected plunge in orders last month, stoking more fears about an economic slowdown.  Former Fed Chairman Alan Greenspan has warned of a possible recession in late 2007, noting that companies are welcoming too much risk.

 Everyone knows that the major U.S. stock indices are on a long term streak that has broken all records and is long overdue for a reappraisal. . Simply put, there has never been a greater string of U.S. stock market sessions without a requisite 10 percent “correction”.

 Oil markets, on the other hand, had a 25 percent downslide in late December and January. Whether that was a correction or a Britney-style “haircut” will be left to the oil price historians.

Crude oil and refined products’ futures can’t muster much more of a rally, if financial markets are under assault. But based on the wholesale increases of 30-75cts gal that took place between January 22 and February 26, there are “catch-up” moves of some 10-25cts gal that should occur at retail.

  We’ll have a better sense of the “legs” of this oil price rally after this latest Wall Street “scare” runs its course. We’ll also see some data from the Energy Information Administration (EIA) tomorrow which may confirm, deny, or perhaps further muddle the notion that fuel demand is outpacing projections of all the experts, as well as this humble observer.