Will oil prices moderate in 2010?

Increased efficiency by U.S. consumers -- with increases akin to the 1979-82 period, combined with U.S. government conservation measures, sluggish U.S. economic growth of roughly 2.5% over the next couple of years, and an ample oil supply safety cushion of at least 4 million barrels per day, will keep a lid on prices. The top for oil's price in the next couple of years? Well below $100 per barrel, with Deutsche Bank forecasting an average of $65 per barrel in 2010. Oil traded Friday afternoon down $1.48 to $75.04 per barrel.

What's more, rising international demand won't be able to offset the current energy efficiency trend in the U.S. Oil consumption in the U.S. peaked at 21 million barrels per day in 2005, and is now under 19 million barrels per day, according to U.S. Energy Information Administration data, CNNMoney.com reported.

Oil Analysis: The view from here argues that the dollar remains the wild card in the above analysis: a dollar at $1.50 or less to the euro would help keep a lid on prices; a dollar at $1.90 or $2 to the euro would not. Also, although spare capacity of 4 million barrels per day represents a satisfactory cushion, OPEC production cuts could halve that in a hurry. And a 2 million barrel per day cushion would represent a market that's one geopolitical crisis away from rapidly rising oil prices. If the safety cushion rises above 6 million barrels per day, the moderate oil price scenario would become plausible.