Oil prices hit a 6 week high today, as cold weather gripped most of the country.

Over the weekend the nation was hit with a cold front that reminded oil traders that the high demand winter season is on its way, and could help reduce a lot of the oversupply that the market is currently looking at.

Oil surged over $113 per barrel Tuesday on word of supply disruptions in Nigeria and Mexico and increasing fuel demand in China, Bloomberg News reported Tuesday.

Oil increased $1.90 to $113.66 per barrel Tuesday morning after Mexico, the third largest supplier of oil to the United States, shut its fourth export terminal Monday, while Eni SpA halted output in Nigeria, Bloomberg New reported. Meanwhile, China, which boasts world's fastest-growing major economy, said diesel oil imports increased 49% in March 2008.

The other major energy commodities also vaulted ahead on the news in early trading Tuesday. Heating oil jumped 3 cents to $3.25 per gallon, unleaded gasoline added 2 cents to $2.84 per gallon, and natural gas added about 14 cents to $10.20 per million BTUs.

Supply disruptions jolt market

Independent energy trader Jim Dietz told BloggingStocks Tuesday the supply disruptions in Mexico and Nigeria were negative datapoints the oil market did not need.

Oil prices briefly jumped above $107 Thursday morning on news that saboteurs had blown up a major Iraqi export pipeline, the Agence France-Presse reported.

Oil rose $1.26 to $107.16 per barrel in early trading Thursday, before moderating some, to about $106.50. The other major energy commodities also jumped on the news in early trading Wednesday. Heating oil rose about 5 cents to $3.09 per gallon, unleaded gasoline added 1 cent to $2.72 per gallon, and natural gas rose about 3 cents to $9.43 per million BTUs.

One of Iraq's two main oil export pipelines near the southern city of Basra was blown up by saboteurs on Thursday, Samir al-Maksusi, Southern Oil Company spokesman, told the AFP. The pipeline transports oil from the Zubair oil field to the Al-Faw storage facility, where it is exported.

Oil spikes

The Iraq incident marks the second consecutive day a bullish data point has pushed oil prices substantially higher, and underscores the skittish price qualities of the world's most vital commodity, according to independent energy trader Jim Dietz. Dietz said that heading into the week many traders had expected oil to continue to trend lower on sluggish demand for oil and oil products in the U.S., due to its economic slowdown.

Oil closed up $1.65 to $100.88 Tuesday -- a new record-high print close -- as traders piled into the world's most vital commodity on the belief it will serve as an inflation hedge if U.S. inflation accelerates this year.

Oil had hit an intra-session high of $101.11 earlier in the day before pulling back slightly. (Oil hit an all-time high, in inflation-adjusted terms, of $102.80 per barrel in April 1980.)

Energy commodities close up

The other major energy commodities also closed higher. Heating oil gained about two cents to $2.79 per gallon, unleaded gasoline climbed about one cent to $2.54, and natural gas gained about one cent to $9.19 per million BTUs.

Independent energy trader Jim Dietz told BloggingStocks Tuesday that the market is not taking into consideration oil's bearish fundamentals, which show rising inventories in several key categories, but is trading more on psychology: namely, ambition.

It's rarely easy to offer a contrarian point of view, particularly when a vital commodity is in such high demand as oil is today, but author John Cassidy attempts to do so in the January 2008 issue of Portfolio magazine, "The Coming Oil Crash."

In it Cassidy walks us through classic cyclical theory, i.e. what happens to a commodity when markets work as they should. Namely, that the recent tripling of oil prices is unleashing forces - - as it did the mid/late 1990s - - that will bring oil's price tumbling down in the next few years to $50 per barrel, perhaps even as low as $30 per barrel. (Oil closed Friday up 32 cents to $96.74 per barrel.)

What are the factors that will prompt the dramatic slide? First, new technology which allows for more oil extraction per zone. Second, a global slowdown that could certainly cause oil prices to drop, and put the brakes on demand. Third, systematic shifts away from oil, due to price: oil's lofty price is encouraging countries to shift some energy requirements permanently to alternative energy sources and to use less oil. Fourth, new oil discoveries, combined with technology, will add large amounts of new oil supplies from such previously unfeasible zones in the Arctic Ocean, Brazil, and the Gulf of Mexico. Fifth, ethanol production in the U.S., although energy intensive, could curb demand for oil. Finally, quick ramp-up alternatives natural gas, nuclear power, and synthetic oil will displace an increasing amount of crude oil, putting further downward pressure on prices.

Overnight, a barrel of crude hit $86.79 on the New York Mercantile Exchange, according to MarketWatch. The news site says, "Among the bigger news items impacting oil, Turkey's government asked parliament late Monday to approve a cross-border offensive against Kurdish rebels in Iraq."

But it now appears that almost any excuse will move oil up.

And this is not the end of it. OPEC is only lifting production by 2% in November, while Chinese demand for imported oil rose 18% in the first eight months of this year. Turmoil in areas where oil is produced is growing. Nigeria and Venezuela are not considered stable. It will not take much of another "little war" in the Middle East to move crude higher. The only good news is that hurricane season is winding down and production interruptions in the Gulf of Mexico are less likely.

With a tip of the hat to Al Gore, the rotund champion of the environment, former Vice President, and current Nobel winner, big economies are still their own worst enemies in the arena of energy consumption. There is no reason to believe that supply can keep up long-term, and OPEC sees no reason to help out. Higher oil prices are an excellent money-making proposition.

Oil is moving higher. There are too few forces to move it down. And, with winter setting in around the Northern Hemisphere, a bit of oil is going to be needed to keep us warm.

Douglas A. McIntyre is a partner at 24/7 Wall St.