Could Oil Threaten The Global Recovery? (USO, USL)

As oil is near a 27 month high, some are wondering whether it could derail the global economic recovery, as oil continues to move higher. As of last check, oil was slightly down to around $91 per barrel, but the larger moves will be to the upside, and it's only a matter of time before oil hits $100 per barrel. Gasoline over $3 per gallon makes people take notice to their gas consumption, but not do anything about it. "We expect oil demand to remain strong in 2011. Growth rates will slow down, but in terms of absolute levels we still expect a record year," said Amrita Sen from Barclays Capital. Oil sharply higher than $100 per barrel will hurt consumers sharply, as every 1 cent in the rise of gasoline cuts consumer spending by around $600 million per year. Obviously with oil over $100 per barrel, we're going to see consumer sensitive names be hit hard, especially names like Wal-Mart WMT and Target TGT. Target will be less influenced than Wal-Mart, as it caters to a higher end consumer, but it should be impacted nonetheless. Since oil looks like it's going to continue creeping higher, oil related names like Exxon Mobil XOM, Chevron CVX will continue higher, as these companies track the price of oil. It's a shame that one sector of the economy essentially controls the rest of the world, and is so integral to the health of the economy. Should oil move sharply higher than $100 per barrel, I can't see how the global economy doesn't stutter step in 2011, which would be negative for equities across the world. Disclosure: long TGT