One day, oil prices and related exchange traded funds (ETFs) are down, the next day, they soar again. Today is no exception: oil jumped more than $3 a barrel and set a new record: $127.82.

Not only is the summer travel season impacting prices, but concerns over China’s demand for fuel in the wake of earthquakes, reports Pablo Gorondi for the Associated Press. Technical trading is also being eyed as a cause – it takes price patterns and other technical data into account instead of supply and demand.

Naturally, oil, oil equipment and other energy ETFs rose on the news, including:

• United States Oil (USO), up 32.3% year-to-date
• United States Gasoline (UGA), up 17.8% since Feb. 28 inception
• iShares Dow Jones US Oil & Gas Exploration (IEO), up 21.1% year-to-date

Meanwhile, mood-wise, consumers are feeling about as good as they did in June 1980, with  consumer confidence is at its lowest point in 28 years, Reuters reports.

Economists had been expecting an index reading of 62 instead of the 59.5 reading. The numbers are fueling worries that the United States could be entering a period of stagflation – a sluggish economy combined with accelerated price growth.

If that’s the case, people may continue to steer clear of the malls and still restrict themselves to mostly buying the bare essentials. Retail ETFs might continue to feel the pain:

• SPDR S&P Retail (XRT), up 3.1% year-to-date
• Retail HOLDRs (RTH), up 5.1% year-to-date

For full disclosure, some of Tom Lydon’s clients own shares of RTH.

Tags: Energy, IEO, Natural Gas, Oil, Retail, USO, XRT