HardAssetsInvestor

Mike Norman, Hard Assets Investor (Norman): Hello, everybody, and welcome to HardAssetsInvestor.com. I'm Mike Norman, your host. My guest today is Dan Dicker, president of MercBloc LLC, and a CNBC contributor. Dan, thanks for coming back on the show.

Dan Dicker, president, MercBloc (Dicker): Thanks for having me, Mike.

Norman: Nice to have you back. You're the oil guy. We haven't had you on here in awhile, so let me get your outlook now. What do you think's going on? We've seen oil pull back again below $90 WTI, Brent coming off, but is this the pause before we go higher?

Dicker: Actually Mike, I think that there's some factors that are weighing into the oil market right now. They are, of course, economic. Some of them are fundamental; most of them are economic.

What we've seen of course is the Fed with their QE-infinity release more money, and in fact free up more money for people to chase risk assets. And usually that's meant that oil has gone with the stock market. In this particular case over the last week and half, two weeks, since QE-infinity was announced, what we haven't got is that blast in oil prices that most might have expected along with the stock market, which has clearly shown a bid at every level. The stock market … 13,500, and the Dow, considering where we are economically—bad growth numbers, manufacturing all bad, unemployment—you name it. The stock market this high has been very much a function, as you know, of the Fed and money kind of chasing risk assets.

Norman: Right. But we also have growth in the economy. It's not very strong, but there's growth. And companies have found a way to profit in the environment. We have low labor costs. It's definitely factoring in at low inflation. So I think stocks … there might be another fundamental going on.

Dicker: OK, but what we know from history is that, at least in the last four or five years, there's been a very strong correlation between oil prices and the stock market. So when you get the stock market rallying, you generally get that kind of chase in risk assets in the oil market as well. And that has not been happening in the last two weeks.

Now let me give you two in-the-weeds ideas for why this has been the case. And if I get too technical, then you'll stop me or you'll explain it better than I will. One of them has been the state of the crude curve. Now, the crude curve for the last, let's say, for the run-up in '07—and in fact, the last two run-ups that we got in '09 and '10—we had what's known as a contango marketplace, where the prices that we saw in spot months were cheaper than prices that we saw in back months.

Now what that does is it drives physical players into, in fact, waiting to pump, creating shortages in certain places. And in fact not jumping into a marketplace …