The end of easy oil remains arguably the most powerful driver in the sector, though the unprecedented drop-off in demand that occurred in the wake of the credit crisis and resultant economic dislocation has obscured this long-term trend. But with the global economy and credit markets now on the mend, this theme should come back with a vengeance over the next few quarters.

Consumer and producer behavior from 2004 through mid-2008 is not consistent with artificially high oil prices. The speculation argument has little basis in reality. The real cause of rising prices is unusually strong demand growth coupled with sluggish supply response despite record spending.

The 170 billion barrels of recoverable reserves can help mitigate North American concerns about global security without causing extreme planetary degradation. The key is for US and Canadian policymakers to coordinate climate policy, combining efforts to regulate greenhouse gas emissions, for example, by at least linking their respective cap-and-trade proposals that are almost sure to be enacted within the next 12 months.

A month ago prominent bears were arguing that earnings season for the S&P 500 would cut the rally off the market’s March lows short. But just the opposite happened: Earnings results were largely well-received, and the advance continued.

Even after the catastrophic plunge in energy prices and producer stocks since summer 2008, despite almost universally gloomy forecasts for global economic growth and in spite of an apparent supply glut heading into “shoulder season,” I’m still long-term bullish on energy.

The fate of the US economy and the duration of the current downturn remain key to the performance of global stock markets; I’ve made an analysis of LEI a monthly feature of this e-zine. Since the latest reading was released Thursday, Mar. 19, 2009, it’s high time we took another look.

Neither ultra-low interest rates nor the fastest growth in money supply in a generation form the basis for a durable economic recovery. We absolutely need to see strength coming from other corners of the economy.

The oil market is caught in a crosscurrent between fears of declining demand and the potential for global supply to come down sharply in the first few months of 2009. For at least the next two to three months, I suspect these opposing forces will keep oil locked in a range between roughly $30 a barrel on the downside and around $50 to $55 on the upside.

Demand will remain the primary focus of oil markets for at least the next few months. But what’s more interesting to me than demand and the implications of volatile short-term economic data is the ongoing supply destruction that’s evident for both oil and natural gas.

There’s been an abundance of bailouts this week, with everyone propped up so far other than the ones who really need it. But the news helped turn what could have been a dismal week for stocks into a rather flat one. The Dow Jones Industrial Average lost 0.2 percent for the week; the Nasdaq Composite grew 0.6 percent; and the S&P 500 tacked on 0.3 percent.