Many investors / traders are aware of the increasing demand for oil stemming form emerging markets economic growth. Vibrant, dynamic economies in China and India, but also in Australia and the Middle East, have been the biggest factor in oil's four-year bull market, which has brought oil prices to a record of over $140 per barrel.

Moreover, oil sector analysts, economists and executives are counting on continual, sizable oil production increases from non-OPEC nations to help contain oil prices in the quarters and years ahead, but now it appears there may be a problem related to that assumption.

Non-OPEC, OPEC output estimates lowered

The U.S. Energy Information Administration, the U.S. Department of Energy's statistical unit, has lowered its estimate for non-OPEC production in 2010 by 1.1 million barrels per day to 51.8 million barrels per day, from last year's forecast of 52.9 million. At the same time, the EIA lowered its 2010 OPEC production forecast by 400,000 barrels to 37.4 million.

Further, the EIA now sees 2010 global oil demand at 89.2 million -- in other words a statistical balance between daily global oil supply and demand.

Economist Glen Langan told BloggingStocks the projected production reduction is not good news for consumers in either the developed or developing worlds.

This energy fact will not be a revelation to American motorists:

The U.S. Energy Department now forecasts that gasoline prices will remain high -- around $4 per gallon -- this year and next, The Associated Press reported Wednesday.

The Energy Department's Guy Caruso, head of the department's Energy Information Administration wing, announced the revised forecast in testimony before a U.S. House of Representatives committee, The AP reported.

The EIA now expects the average U.S. gasoline price, currently over $4 per gallon, to peak at $4.15 per gallon in August. Regular-grade gasoline, which typically is 87 octane at U.S. gas stations, is expected to average $3.78 per gallon in 2008, or 97 cents above the 2007 average price.

Nevertheless, many high-cost U.S. cities -- including New York, Los Angeles, San Francisco and Boston -- are already experiencing gasoline prices in the $4.20-$4.60 per gallon range, with selected areas approaching $5 per gallon.

Moreover, the steady rise in gasoline prices is occurring despite the fact that weekly U.S. gasoline consumption has declined, on a year-over-year basis, for more than four months.

The man who heads the Federal government unit that handles oil price forecasts says oil will be above $100 for a long, long time, certainly into 2009.

"You've got this global market still operating at very low spare (oil production) capacity, all of which is in Saudi Arabia," Guy Caruso, head of the Energy Information Administration said at a Reuters-sponsored meeting.

Mr. Caruso may be a bit late in telling the markets something that almost all experts have figured out already.

It is now fairly clear that oil demand in China, India and much of the rest of the developing world is not going to drop. They need crude to fuel their rapidly expanding economies. At the same time, older oil fields in places like Mexico and Russia are not producing at the levels that they did just a few years ago. OPEC is not raising production, perhaps because it likes the income from high oil too much.

It is a shame that government experts have estimates that are so far behind the times, but anyone with a brain is not listening to information that is months past what the real world already knows.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Tens Stocks Under $10 letter.

In this case, the official, 'worst-case' scenario may not represent the actual worst-case scenario.

The U.S. Department of Energy, through its Energy Information Administration unit, has already released its projection for U.S. summer gasoline prices, and it expects the average U.S. price to peak at $3.60 per gallon by late spring/early summer. The current average is about $3.35-$3.38 per gallon.

Meanwhile, oil Friday flirted with yet another all-time high. Oil rose 73 cents to $115.59 per barrel, while wholesale unleaded gasoline gained 1 cent to $2.95 per gallon. On Thursday billionaire investor and oil industry guru T. Boone Pickens told Bloomberg News oil is headed for $125 per barrel.

The EIA does not expect much of a price rise beyond the $3.60 level because it expects U.S. consumers to cutback consumption to contain their transportation fuel bills amid the record-high prices. And, in fact, there's considerable evidence to support the EIA's demand projection: for the first time in more than a decade, weekly U.S. gasoline sales have declined on a year-over-year basis for more than two months.

U.S. crude oil inventories increased 1.1 million barrels for the week ending February 8, 2008, the U.S. Energy Information Administration announced Wednesday. The statistic was below the 2.37 million barrel increase estimate.

The oil markets took Wednesday morning's inventory report in stride. Oil was down 41 cents to $92.37 per barrel, heating oil fell about one cent to $2.59 per gallon, unleaded gasoline fell one cent to $2.35 per gallon, and natural gas declined about three cents to $8.41 per million BTUs.

Meanwhile, gasoline inventories rose 1.7 million barrels and distillate stocks fell 100,000 barrels. At 301.1 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year.

Refineries operated at 85.1% of their operable capacity last week, up from 84.3% a week earlier.

Trader sees spring oil price decline

Independent energy trader Jim Dietz told BloggingStocks Wednesday the oil market is currently being driven by geopolitical events more than oil demand.

Most investors are aware that China's surging growth and increasing energy use have helped push oil to +$90 per barrel near-record highs. But what many probably don't know is that China's double-digit GDP growth is forcing up the price of another major energy source: coal.

The price of coal -- the most plentiful energy resource -- is rising at an alarming rate: Asia prices are up more than 30% this year, The Wall Street Journal reported Tuesday (subscription required), due mostly to China's net importer status. China had been a net exporter of coal, but in mid-2007 it imported coal for the first time. Coal is trading above $125 per metric ton. In 2003 it traded at about $25 per metric ton. Since January 2007 alone, coal is up more than 140%.

U.S. coal suppliers have benefited from the run-up: Arch Coal (NYSE: ACI) is up about 90% since August 2007; ACI was down about $1.50 to $53.32 in Tuesday afternoon trading. Meanwhile, Peabody Energy (NYSE: BTU) is up about 45% since August 2007; BTU fell 40 cents to $56.12 on Tuesday afternoon.

The Energy Information Administration's long-term energy outlook is that average crude prices will be $67 by 2010 and $72 by 2030. The second number is an upward revision of nearly 20% over last year's forecast.

While these numbers may seem modest compared to current oil prices and may turn out to be too low, they highlight the fact that even the US government sees sharp rises in the price of crude. Perhaps the most important projection from the new government study is that "dearer oil will crimp economic growth. EIA projects the economy will grow by 2.6 percent per year between now and 2030, down from last year's projection of a 2.9 percent growth rate," according to CNN Money.

The model assumes that alternative energy use will continue to grow, but that "the nation will emit 25 percent more carbon dioxide in 2030 than it did in 2006."

There does not appear to be any good news in the report, and perhaps that is the best news of all. Now that the government is admitting that there is a long-term problem with oil consumption, perhaps Congress will take a harder look at how to alleviate the problem.

There is, of course, the chance that the government is wrong. Oil is now back above $90, and predictions still abound that it will top $100. Analysis shows that oil-producing countries are keeping more crude to build their own economies. Consumption in nations like China is not falling.

If the growth rate in the U.S. economy will be 2.6% between now and 2030 with oil at $67, what will it be if crude stays above $90?

Douglas A. McIntyre is an editor at 247wallst.com.

Most investors and readers are aware of the subprime mortgage-driven credit market slump. Lending to potential customers has declined substantially, from typical homebuyers to large corporations.

To be sure, the credit markets are not frozen, as they appeared to be during the August 2007 credit crunch and accompanying equity market sell-off, but lending requirements are much more rigorous today, following large subprime investment losses.

Speculative deals -- be it a large debt offering backed by mortgages, or a mortgage for a condominium project -- are not being approved. Two years or so ago, flush with cash and eager to take advantage of the yield spread, these type of deals undoubtedly would have received multiple funding offers from banks, mortgage companies, and other investment firms.

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.

For those of you who just can't stand the thought of running out and filling up your car with gasoline, I have a little bit of good news: gasoline prices fell again last week. According to the Energy Information Administration, the national average fell by a little over 8 cents a gallon last week.

This marks the third week in a row that prices have fallen, lowering the national average to $3.08 for a gallon of regular unleaded. While it is encouraging to see prices falling to a four-week low, prices are still up 91 cents from the start of the year.

U.S. refinery production has been the root of the problem, and although America's refineries are still running at sub 90% capacity, gasoline prices have been slightly offset by increased motor fuel imports. Analysts are expecting that more refineries will be coming back online during the remainder of this month, and if we continue to see above average fuel imports, then gasoline prices should continue to retreat.

This week's inventory report from the Energy Information Administration showed big jumps in both oil and gasoline inventories which has in turn applied downward pressure on oil prices. After larger than expected inventory gains the price of oil has now fallen by $1.02 today to $62.15.

But what is bad news to oil investors comes as positive news to those struggling to keep up with the price of gasoline. Analysts had been expecting to see gasoline inventories rise by about 1.1 million barrels last week but we were treated to a nice surprise jump of 1.7 million barrels.

One of the big reasons for the current record high gasoline prices has been the lack of refinery production over the last couple of months so it is definitely good news to see inventories rising faster than expected. But they are still operating a bit under where analysts had been hoping to see. Production rose to 89.5% capacity last week, which was a rise of about 0.5% over the previous week, but still slightly under the 90% output that analysts had thought we would be seeing.

Oil inventories showed an increase of one million barrels while analysts had been expecting to see a jump of 100,000 barrels.

So hopefully we are seeing a trend that will ultimately lead to gasoline prices stabilizing. I still don't think that we are going to be seeing prices retreating anytime soon with the summer driving months coming up fast, but I do believe that prices should begin to level off. Now that the refineries are getting back up to speed things should slowly start to get back to normal.

Could we finally be getting ready for a little relief at the pumps? I doubt that we are going to get a major break in prices in the weeks ahead, but looking at this week's gasoline inventories numbers give us at least a bit of hope.

Over the past couple months we have seen a major fall in gasoline inventories as refineries have been unable to keep up with unusually high demand, but today we see a shift in that trend.

When the Energy Information Administration released its weekly numbers today, analysts had been expecting to see gasoline inventories show a rise of about 100,000 barrels. Surprising everyone, we actually got some good news that inventories rose much more than expected, with a gain of 400,000 barrels.

While this is definitely a good sign, we are a far cry from being out of the woods just yet. We have to keep reminding ourselves that we are still not in the high demand peak summer driving months. Demand growth has been decreasing, but we will just have to wait and see how this continues as the weather starts to get nicer and people begin taking their vacations.

Most of the recent blame for the record high gasoline prices has been given to unusually low production out of our refineries. We always see refinery capacities lower during the spring months as companies typically use this time of year to shut down refineries for maintenance and repairs, but this year it seems like things have been much worse than usual. In possibly a good indication of things to come, last week we saw production jump by 0.7% to 89%, but this is still slightly below the 89.2% production that analysts had been hoping to see.

A couple of weeks ago, I wrote about consumers feeling the heat from scorching gasoline prices. At that time I pointed out that some analysts are predicting that we will be seeing $4 gasoline this year! While we have yet to see this sort of price explosion, we are now looking at all time highs for gasoline costs across America.

In a new study that just came out over the weekend, industry analyst Trilby Lundberg noted that the average price of a gallon of gasoline in America is costing consumers $3.07 per gallon. Lundberg reached this average after taking a survey of 7,000 gasoline stations nationwide. At this level we are now slightly above the previous record high for a gallon of gas which was set last summer on Aug. 11 at $3.03.

What impact is this going to have on drivers? Are we going to see a sudden slow down in driving? Doubtful. The plain and simple truth is, as Tom Barlow pointed out last week, no matter how high the prices go, drivers will continue to fill up their tanks, going about business as usual. Tom pointed out a couple of good reasons why the market will be more than willing to pay $3 for gasoline, and his arguments would hold water even should prices continue to rise and we do reach $4 gasoline over the next couple of months.

While the report out of Lundberg this weekend definitely gives us a reason to shudder at the thought of the next time we hit our local gas station, what I am going to be paying more attention to this week are the new estimates that will be coming out of the Energy Information Administration. They are scheduled to release their new estimates tomorrow on what levels we can expect to see gasoline hitting this year.