While the market sleeps, oil rises

Stephen Schork (see below) makes a bold statement that things are not about to change, when we have seen the markets convulse to record levels in every direction over the past few months. |He is right that the credit crisis has produced something of a knockout blow. But economies around the world are down, not out. People are still driving to work, and eating. Life goes on.

Oil may take a while to ramp up, as inventories are currently quite high. I believe we will see prices spike again sooner than we'd like, and sooner than we'd expect. This is because depletion is eating at supply anyway, and current low prices will - in some places and some industries - ramp up demand.

The other aspect, and this is logical, is the current price of oil doesn't actually reflect the cost of extraction. Saudi require $60-$70 to breakeven. It's not very clever though for suppliers to be selling at sub-cost. Some wheeling and dealing is going on, which may seem like a good thing. Unfortunately, it creates a false perception that fossil-energy is cheap. It's not, which we will discover to our great cost.

clipped from biz.yahoo.com "From a logical point of view, there is no reason for spot Nymex crude oil to trade above $40," analyst and trader Stephen Schork wrote in his daily publication, The Schork Report. "OPEC is cutting production because no one is buying their oil. And, given the dire global economic outlook ... that is not about to change." Ritterbusch said in the near term prices are likely to swing between the mid-$30 range on the down side and the mid-$50 to low-$60 range on the high side. In other Nymex trading, gasoline futures rose 1.8 cents to $1.17 a gallon while natural gas fell 1.1 cents to $4.479 per 1,000 cubic feet. Heating oil rose 1.55 cents to $1.4425 a gallon. In London, the March Brent contract rose $1.24 to $48.19 on the ICE Futures exchange.