Historically, oil prices and stock prices were negatively correlated, or exhibited a close to zero correlation. During the financial crisis, the equity-oil correlation spiked. In recent weeks, it has plunged, and become sharply negative.
Some people try too hard to explain this pattern. To me it has little to do with QEII, and the explanation is relatively simple. It depends on what are the important shocks at any particular time. When macro demand shocks predominate, correlations will be positive; when oil supply shocks are important, correlations will be negative.
During the financial crisis, there was slack oil production capacity, and price movements were demand driven. Prices plummeted when demand crashed in the post-Lehman days. Prices rebounded when economies around the world started to recover. The economic crash and recovery drove stock prices lower then higher. So during the crisis and recovery period, the state of the macroeconomy drove oil demand,
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Genelle Frenoy Shania Twain Gwen Stefani Sunny Mabrey Karolína Kurková
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