It looks like, with new economic data coming out, oil prices have begun to retreat from the year highs of around $72 a barrel.

Oil prices fell more than $2 a barrel today after the World Bank said that the global economy would shrink by nearly 3 percent this year, which is a much larger prediction than previously given. The March prediction was for a contraction of only 1.7%.

When the economy is weak, investors tend to pull out of the commodities market and that can drive the prices of commodities like oil down. July delivery for crude fell to $67.30 a barrel Monday afternoon in Europe after falling the previous trading day $1.82.

Investor optimism led to an eight month high of $73.23 a barrel earlier this month. Optimism surrounding the U.S. economy and predictions of growth toward the end of the year led investors to buy into the commodity market.

Victor Shum, an energy analyst who works for Purvin and Gertz in Singapore said, “Oil may have peaked in the short term. The market is over ripe for a correction. Eventually the laws of supply and demand will re-exert themselves.”

The World Bank was just full of bad news today as it also predicted global trade to drop by nearly 10 percent this year due to the deepening of the global recession.

I find it almost amusing how one little tid bit of news can so deeply effect the market. Remember last year when it seemed like any little bit of news that came out would drive the price of oil higher? It almost seemed like if someone looked at an oil pipeline then the price would jump 5-10%. Now, with the recession, if anyone mentions something about the economy shrinking or have a pessimistic outlook on the market, then the market falls.

I have said it in the past, and I think I should say it again. I believe that some of the market volatility in the past has been due to the amount of inexperienced traders in the market. A lot of investors are forgoing real investment advice and simply following what Jim Cramer or CNBC tells them to do.

The truth is, once that information is made public that investor won’t realize the returns that the news touted.

The Secretary of the United States Treasury, Timothy Geithner, said this weekend that the global recession seemed to be ‘losing force’ but that to come out of it strong the United States and China would need to institute major economic reforms to create a stronger foundation. According to Geithner, a successful transition to a stronger global economy will “require substantial changes to economic policy and financial regulation around the world.”

Geithner, who has barely been heard from in a more notable sense since nomination, has been in China the last few days to create closer economic ties with China after realizing that they are a major key to economic success. He told reporters that he was hoping to gain the same economic relations with China that we enjoy with several European countries.

In the speech he gave there, he praised the economic transition China has achieved while avoiding past trade disputes the United States has had with them, hoping to foster a closer relationship. It seems that he was hoping to help them bring the yuan,, the currency in China, to a higher economic status. American manufacturers see the yuan at its current economic status as a major reason why trade between the two countries is lower than proposed.

“The global recession seems to be losing force…. The financial system is starting to heal,” said Geithner. He went on to say, “These are important signs of stability and assurance that we will succeed in averting financial collapse and global deflation, but they represent only the first steps in laying the foundation. The process of repair and adjustment is going to take time.”

Timothy Geithner also said that the necessary reforms will include getting the United States budget deficit under control once the recovery is firmly in place, something the Obama administration has been talking about since the election. He said that China will need to create strength in things like pension and health care in order to increase spending confidence there. For a long time, that has been considered critical if China is going to increase domestic production. (Apparently that means the millions of products America buys from China every year is not enough.)

“Our common challenge is to recognize that a more balanced and sustainable global recovery will require changes in the composition of growth in our two economies,” Geithner said. With 1.3 billion people, China ranks as the third largest economy after the United States and Japan, sealing the need for a more unified recovery process. Geithner said that China’s status in the global economy should be recognized better in institutions such as the International Monetary Fund.

In addition to meeting with some of his former professors today, Timothy Geithner was scheduled to visit an economist training program set up by his father who was once in charge of Ford Foundation programs in Asia.

The “overproduction” makes up for just over a million barrels a day.

In the short term, the cut in production would increase the price of oil, however in the long run, cutting oil production will decrease demand and lead people to find other forms of energy. I believe cutting production now will doom the oil business later.

It sounds like OPEC is looking for a target price of $70 a barrel. However, with the “shaky” global economy, many people in parts of the world can’t afford oil, which is sometimes seen as a luxury rather than a necessity.

Until the global economy perks up, oil demand will be low.

In February Toyota reported a 40% drop in car sales in the United States alone. This has led the company to seek $2 billion in loans from the Japanese government to help with the slump in sales.

So this just proves how flat the market is right now, as one article said “When Toyota starts begging, you know it’s bad” ‘

I wonder who will be next or which car companies can survive this serious downturn. I guess it’s just a matter of time before we’ll be able to see who’s made it out ok and who didn’t make it out at all.

Whoever he chooses for the team faces the worst economic slowdown in decades, and with the United States’ economy foreshadowing the global economy, many are looking this way for what will happen once Obama takes office.

Oil rose 37 cents to $50.30 on the NYSE in midday trading in Singapore.

At this point I believe that investors with 401(k)s and other retirement investments are just trying to see their money stop depleting, even though in a couple of years the market will bounce back, no one likes seeing all their savings disappear.

Hopefully this will not be a deep recession and the global economy won’t suffer as much as some are thinking it may.