Today's Major Market Move: WTI Crude breaks $100/barrel

Back on Oct 26th after crude had climbed 14% for the month, we stated the following in our blog: "If equities continue their strong run and the perception remains that the European problems have been fixed or at least alleviated, don't be surprised to see $100 or higher WTI crude prices in the near future." It's now exactly three weeks later and the second half of that statement has come to pass. At the time of this post, WTI Crude futures are up 2.6% for the day and last traded at $101.89.

Click here to go to the live chart.

What's truly ominous is that the preconditions of my Oct 26th statement ("equities continue their strong run" and "perception remains that the European problems have been fixed or at least alleviated") turned out to unnecessary for oil to continue its run higher.
Here's how some global equity indexes have performed since Oct 26:

Click here to go to the live chart.

As you can see, the stock markets in major economies are flat to down. How about the progress on fixing the European debt crisis? Let's take a look at credit default swaps:

Click here to go to the live chart.

Bear in mind that increasing credit default swap prices means a higher default risk on the bonds (i.e. it's bad).

Besides currency devaluation and inflation fears, here are some other items that are potentially impacting oil prices:

-Potential Israeli strike on Iran
-Instability in Iraq due to U.S. pullout.
-legal battle surrounding the TransCanada Keystone XL pipeline
-the ongoing uprisings in the Middle East
-decrease in U.S. crude oil stocks

We now have some people calling for $200 oil in the not-too-distant future. I don't think we get there in the next 2-3 years. Anywhere above $150 puts a huge dampener on economic activity and also saps the political will for central banks to increase liquidity. I believe we would see the S&P 500 hit new post-crisis lows (sub 666) before we would see WTI above $150.