Oil futures traded down 12 cents to $39.94 per barrel early Thursday and even though the price may straddle the $40 range for awhile, oil is likely headed lower on a new, longer-term dynamic: declining U.S. demand.

That's correct: declining U.S. demand. The last 20 years have been characterized by rising U.S. oil consumption, but now the U.S. Energy Information Agency. incorporating the most-recent changes in U.S. consumer behavior, says there will be no appreciable growth in U.S. oil consumption between now and 2030, with biofuels accounting for all of the growth in liquid fuels.

Energy Trader Jim Dietz, who bases his trades on oil demand, told BloggingStocks Thursday if the EIA's forecast proves to be accurate, it alters the structure of the oil market.

"Most models assume increasing U.S. oil demand, with even small increases during a recession. If in fact U.S. demand continues to decline, OPEC's production cuts short-term will not be enough to keep inventories from rising, and oil will fall below $30 per barrel," Dietz said. "The EIA's report is one of those reports that doesn't get a whole lot attention, but it has some remarkable predictions." Dietz added that he is currently short oil and unleaded gasoline, with monthly contracts.

A couple of days ago it looked as though we were well on our way to $70 oil, but prices have fallen over $1 a barrel today following this week's inventory data from the Energy Information Administration.

In its report the EIA indicated that oil stockpiles last week rose by an impressive 6.9 million barrels and gasoline reserves increased by 1.8 million barrels. With both oil and gasoline inventories up traders have pushed oil down $1.08 to $68.02 and for the moment has put the brakes on the recent bullish run for oil.

Refinery production has been a vital area of concern this year with American refineries being unable to maintain output levels running above the critical 90% range. Even though gasoline inventories were able to jump last week, America's refineries are not able to take responsibility for the recent upward move. The EIA reported that refinery output actually fell last week 1.6% down to 87.6%. The truth behind last week's increase was actually a rise in supplies of blending components for gasoline.

Even with today's inventory data and subsequent pullback in oil prices I do not think that we have seen the end of this current bull oil market. For now things are cooling off, but let's not forget that we are still only at the beginning of the summer driving months, and with all the violence that is taking place in the Middle East these days, there are still plenty of factors that could, and should, lead to higher prices by the end of the month. We may see oil pull back another couple of dollars down to $66, but I for one will not bet against $70 oil by the end of the month just yet.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

It has been a strong day for oil following this morning's weekly inventory report from the Energy Information Administration. The EIA reported that gasoline inventories were unchanged last week, and this was all the bulls needed to come out and drive crude prices higher.

So far oil prices are trading up $1.07 to $66.42, just a few pennies shy of their intra-day high of $66.48. We have been watching gasoline inventories closely lately, as record high prices at the pump this year have been felt across the nation.

Yesterday, I wrote about a report out of the EIA about how gasoline prices had fallen a bit over the past couple of weeks, but that unless American refineries were able to keep up with soaring demand, we should be expecting higher prices to come back into the market. That scenario is still holding strong.

Refineries have been blamed this year for causing the record high prices we have seen at the pumps, and with another week of lackluster improvements in inventories, it looks like refineries are just not yet back up to the task. Analysts had been hoping to see a rise of roughly 2 million barrels of gasoline. This week's flat inventory results bring to an end a 5 week run of rising inventories and could be a bad omen for what we can expect to see at the pump over the next few weeks.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor'sObserver.

Oil got off to a strong start this week today following comments from Iran's oil minister which indicated we should not be expecting any production adjustments from OPEC any time soon. With OPEC's next meeting coming in September, the notion that we should not look for any production lifts over the summer has helped push prices up $1 to $65.76 a barrel.

With both gasoline and oil prices trading at very high levels, there has been some hopes that OPEC would try to step in and come to the rescue by lifting its output, but now that seems to be out of the question. In a related story, Saudi Arabia has reportedly informed its Asian and European customers that they should be expecting to receive the same quantity of oil this month as they did in June. Unfortunately for its customers, these levels only represent 90% of the contracted amounts.

With OPEC not stepping in to help ease high prices, we are going to be forced to rely on American refineries for the time being to step up to the plate. So far this year, U.S. refineries have not been able to keep production output high enough to keep up with rising demand, and as a result... record high gasoline prices. After a couple weeks of operating above 90% capacity, refineries once again fell back to under 90% as reported in last week's weekly inventory report from the Energy Information Administration.

All eyes are going to be watching this week's report in hopes that refiners are indeed able to cross back over 90%, but until we see them running at around 92 or 93%. prices are going to continue to remain high as we head deeper into the summer driving months.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor'sObserver.

We had a strong day for oil holders today as oil has popped back up above $61 a barrel to a current trading price of $61.44 gaining $2.04. A couple of factors were at play today helping push the precious crude higher.

One factor helping with today's move was the weekly inventory report from the Energy Information Administration (EIA) which showed that inventories fell 3.3 million barrels last week. This comes after a couple of weeks where reports showed inventories have been on the rise lately, and greatly contradicted the consensus estimates of a 2.6 million barrel increase. Distillates used in heating fuels were also on the decline, falling 1.4 million barrels in a sign that maybe the winter heating months are finally being felt by inventories.

There are also some more troubles playing out in Nigeria, where rebels have forced the OPEC nation to cut about 25% of their current production. Nigeria has long been troubled with militants trying to gain more political power by attacking it's oil facilities, so today's moves aren't really anything new, but do remind us how fragile that nation's oil supply really is.

And speaking of OPEC, we have been watching the eleven nation group lately as the oil cartel has been promising production cuts which many think will never come. Today it seems like OPEC may actually be following through on the production pullbacks as Iran has stepped up and let their customers know that they will be reducing the country's output by 176,000 barrels a day beginning November 1. Saudi Arabia has already pledged to trim its production by 1.2 million barrels, but traders have been reluctant to buy into that news until they could tell if the other large OPEC countries would follow suit. With Iran getting on board we could be seeing more traders now buying into that scenario.

All eyes are going to be on ExxonMobil Corp (NYSE: XOM) as they announce their quarterly earnings tomorrow before the market opens. Analyst's are expecting XOM to come in with EPS of $1.59.

Here is a look at how the major oil companies closed out today's session:

• Sunoco, Inc. (NYSE:SUN): +0.8% to $67.74 up $0.56
  
• Valero Energy Corp. (NYSE:VLO): +2.4% to $54.00 up $1.28
  
• ExxonMobil Corporation (NYSE:XOM): +1.6% to $71.01 up $1.12
  
• Chevron Corporation (NYSE:CVX): +1.0% to $67.58 up $0.69
  
• BP p.l.s. ADR (NYSE:BP): +1.3% to $69.22 up $0.92
  
• Oil Service Holders Trust (OIH): +2.4% to $137.75 up $3.25

Let's close with a current chart of oil:


Michael Fowlkes has worked as a stock trader for 7 years and spent the last 2 years working as an analyst and portfolio manager for an online investment advisory service.