by Calculated Risk on 1/26/2010 01:50:00 PM

Two weeks ago I suggested it might be time to start looking for signs of demand destruction for oil (like we did in the first half of 2008). So far domestic demand (as far as vehicle miles) is still increasing slightly, however demand growth in China might be slowing ...

From MarketWatch: Oil slumps on expected rise in supplies, China worries

Oil futures fell on Tuesday, pressured by concerns that China's attempt to slow its growth will curb demand and expectations that U.S. crude-oil supplies are rising.
...
"China is really the driving force in this market," said Dan Flynn, energy trader at PFGBest.
...
Broad concerns about weak growth and demand globally were also heightened ahead of supply data due Tuesday and Wednesday, Flynn said.

"We still have an oil glut in the market place. All in all, [oil trading] should remain sideways to lower," he said.

I think that needs a graph!

Click on graph for larger image in new window.

This graph shows the Shanghai SSE Composite Index and the Cushing, OK WTI Spot Price oil prices on a weekly basis (in blue).

The SSE Composite Index closed down 2.42% to 3,019.39 and oil prices are off from the recent high.

There appears to be a relationship between the two although the Shanghai Composite turned down in last 2007 and early 2008 - well before oil prices collapsed.