The conflict in Libya continues to spark concerns over possible supply problems, sending oil prices soaring over the past couple weeks and settling at a two-and-a-half year high this afternoon.

In addition to Libya, oil also got a push today from a falling U.S. dollar. The greenback was down in reaction to speculation the European Central Bank would be raising interest rates, to fight possible inflation.

OPEC, which is responsible for 35% of world's oil production, has left output quotas unchanged at 24.85 million barrels a day.

The International Energy Agency (IEA) forecasts worldwide demand at 88.8 million barrels a day for 2011, up from 87.1 million bpd this year.

Oil has rallied 25% this year. OPEC profits are estimated to be higher by 35% to $750 billion. Recent oil prices have hovered between $80 to $90 per barrel.

Francisco Blanch, global head of commodity research at Bank of America/Merrill Lynch, stated in the Financial Times that his forecast is for oil prices to move above $90 per barrel, then to $100 per barrel.

With more stimulus from the Fed, more dollars will be sloshing around the world. This gives a boost to oil demand and then higher prices. QE2 is scheduled to continue into 2011, which will support oil prices into next year.

One thing OPEC can never be accused of is: being a bastion of economic stimulus.

An OPEC official said some members of the group are calling for a $100 per barrel oil price, due to the dollar's recent weakening. Oil is priced in dollars.

Venezuelan Energy and Oil Minister Rafael Ramirez told Bloomberg News the recent fall in the dollar means the "real price" of oil is $20 less than current levels, justifying a $100 price. Oil closed down $1.43 to $81.26 per barrel Friday.

This morning, the Energy Department reported a surprise increase in oil inventories, leading crude futures lower thus far. The Energy Information Administration (EIA) reported that crude oil stockpiles increased 3.1 million barrels. Analysts had expected a decrease of 1.3 million barrels in crude oil inventories. Despite the surprise, oil prices weren't as low as one would think. November-dated crude was trading below $83 per barrel shortly after the inventory report.

Are you comfortable with the price you are paying to fuel your vehicles? If so, good; if not, you better look for an alternative fuel vehicle. The Organization of Petroleum Exporting Countries (OPEC) announced earlier today that it is "comfortable" with the current prices for black gold and that it doesn't want to "rock the boat" as the economy attempts to recover from the recession.

I assume that the members of OPEC then lit cigars with $20 bills and sat around sipping brandy from gold snifters while laughing uproariously. OPEC's Secretary General Abdalla El-Badri noted a sense of caution, because the cartel is trying to help the world economy. El-Badri stated that the path of the world recovery is "not really clear," and that OPEC doesn't "want to see a double-dip recession which ... would affect, negatively, almost everybody." Any change in prices or quotas this year will depend on unnamed "circumstances" according to the Secretary General.

Is it more fodder for the oil bulls or the oil bears? In its first forecast for 2011, the International Energy Agency said it expects global oil demand growth to slow to a 1.6% increase in 2011, compared to a projected 2.1% increase in crude this year.

Even so, the 1.6% increase would bring global oil demand to 87.8 million barrels per day (bpd).

The oil market's bears regained control Tuesday, but as they say in the oil trading pits, 'for now,' or 'stay tuned.'

Oil plunged $2.54 to $75.54 per barrel Tuesday afternoon, as the threat from Tropical Storm Alex to the Gulf of Mexico's energy infrastructure waned and after U.S. consumer confidence plunged on the job market's woes, Reuters reported Tuesday.

Today's data points support the oil bears argument that the economic recovery is underway but may slow, limiting oil demand growth, and when combined with ample supplies, will lead to a lower oil price, moving forward.

It is a political science axiom that 'where you stand often depends on where you sit.' A key OPEC official made the case that current oil prices are "comfortable."

Abdalla El-Badri, OPEC's secretary general, told reporters ahead of a meeting with European Union officials, "I don't see any change in production, I don't see any meeting coming before the set up meeting in October," marketwatch.com reported Monday.

Oil fell 57 cents to $78.29 per barrel in Monday afternoon trading.

OPEC's most recent report on global oil supplies said that the world has "no room" for more crude supplies.

OPEC lowered estimates for world demand and raised predictions for non-OPEC production. Here are the numbers:

• While world demand is forecast to rise by 940,000 barrels per day (bpd) in 2010, this is 10,000 bpd lower than previously estimated.
• Non-OPEC production is set to rise by 640,000 bpd, up from 530,000.

Oil prices continue their recent slide today, with investors spooked by the global economy and a lower price forecast by Bank of America Merrill Lynch.

Concerns over the economic situation in Europe continue to weigh on investor's minds, and the major indexes were down over 2% at one point today before rebounding in late day trading.

Is oil at $80 per barrel a price tantamount to a bubble? At least one analyst thinks so.

"It's a bubble and we don't know when it's going to go bust, but it's just a question of time," said Eugen Weinberg, a senior analyst with Commerzbank AG in Frankfurt, told Bloomberg News Monday. "So enjoy the party but stay close to the door."

As expected, OPEC left its production quotas the same on Wednesday, in what was, from a revenue standpoint, its easiest decision in many official meetings.

Further, even though OPEC is pumping about 2 million more barrels per day (bpd) than its 24.845 million bpd official quota, the market is not punishing the group for it. A combination of decent demand, a weak dollar, and global GDP growth has pushed oil prices to levels that are roughly double what they were a year ago. Oil late Wednesday traded down 3 cents to $82.67 per barrel.

Oil is trading higher on the day, but prices have fallen a good bit from the high they hit immediately following this week's inventory report.

Prices rose as high as $83.03 a barrel, and are currently trading at $81.97, up $0.48.

The reason why prices spiked so much following the report was the initial reaction to the smaller than expected rise in crude reserves. Analysts had been looking to see a jump of 2.1 million barrels last week, but the report indicated that inventories rose by a much smaller 1.4 million barrels.

Paul Volcker was chairman of the Federal Reserve during the 1970s and 1980s when OPEC raised the price of oil from about $2.50 per barrel to $30.00 per barrel overnight. Since oil is integral to all parts of our economy, we saw the worst inflation ever. Volcker had to raise interest rates to near 20% to break the back of the inflation. He is no shrinking violet.

Now, again, he is center stage. His latest proposal, called the "Volcker Rule," calls for banks that do proprietary trading to give up their banking status. Goldman Sachs (GS) and other financial institutions acquired bank status during the financial crisis. One condition for receiving TARP money was that institutions had to be a bank. The Treasury department allowed them to become banks, and they did receive TARP money.