Oil prices have been falling today, helped by the release of the weekly inventory report which showed larger than expected reserves in the precious crude.

Going into today's report, analysts were expecting to see the Department of Energy announce that oil inventories fell by 1.9 million barrels last week, but in fact we only saw a decline of 1.6 million barrels.

Gasoline is probably more on the minds of most consumers, and what we saw in gasoline demand was even more extreme. Analysts had expected to see a rise of about 500,000 barrels of gasoline supplies last week, but the actual increase came in at 2.9 million barrels, a clear sign that high gasoline prices have forced many of us to cut back on our usage.

Republicans and my colleague Aaron Katsman are trying to blame Democrat Barack Obama for rising gas prices. This is election-year politics at its worst.

For one thing, as the Washington Post and other independent observers note, drilling for more oil will do little to alleviate the pain U.S. drivers are feeling at the pump. The available supplies are probably not going to make much of a dent in our never-ending thirst for the black gold. Remember, the oil may not be as easy to get or cheap to process.

"Drilling off the coasts would increase U.S. oil production but have no short-term impact on gas prices," the Post says. "While some analysts disagree, an Energy Department report last year said production would not start until 2017 and have no 'significant' effect on prices or supplies until 2030."

An even more ridiculous idea floated by Republican John McCain is the so-called gas tax holiday, which has been roundly denounced by economists and Obama as a dangerous economic gimmick. Experts estimate that it would save the average consumer a whopping $30.

Shares of UAL Corp. (NYSE: UAUA), the parent company of United Airlines, soared today after the Chicago-based company announced it had enhanced its liquidity by $1.2 billion. The company also posted second quarter results that were not as dismal as Wall Street had expected

The company will receive a payment of $600 million from JPMorgan Chase & Co. (NYSE: JPM) related to the advance purchase of frequent flier miles. In addition, the level of reserves that United is required to maintain under its credit card processing agreement with Chase Paymentech has been reduced to $25 million, a move which will free up about $350 million in previously restricted cash. UAL expects the frequent flier payment to improve cash flow by about $200 million over the next two years.

"Combined with the previously announced approximately $550 million raised from new transactions in the second and third quarters, the company will have increased its total cash balance by $1.7 billion and continues to have more than $3 billion in unencumbered hard assets," UAL said in a press release.

Oil got off to a strong start today, with prices at one point moving up as high as $130.69 a barrel as fears of supply disruptions in Iran have kept the market bullish for the time being.

Prices cool off a bit and are now sitting at $129.40, but you can be sure that as long as the tension between the West and Iran persists, you are going to continue to see prices that just refuse to come back down towards any sort of comfortable level.

Last week, we saw a pretty sizable drop in oil prices (see chart at the end of this post), which could be the main reason why this morning's rally was not able to hold above the $130 mark. Investors are probably still a bit weary of betting that we have hit support yet. What really got the market moving early on was fresh threats from the U.S. that more sanctions would be imposed on oil-rich Iran should it not cease its current nuclear program.

OPEC again lowered its forecast for 2008 global oil demand growth, adding that the economic slowdown affecting the United States and other industrialized nations is likely to lower demand growth in 2009 as well, the group announced (pdf).

OPEC lowered its 2008 forecast to 1.20% global oil demand growth, down from 1.28%. It was OPEC's fourth downward revision for oil demand this year. The new price structure and slower global economy "have helped dampen oil demand growth in many regions," the cartel said in its July report.

OPEC, which accounts for about 40% of the global oil supply, now expects 2008 demand to rise by 1.03 million barrels per day, or 70,000 barrels per day less than the group's previous forecast.

On Tuesday, oil plunged $6.44 to $138.74 per barrel -- its biggest decline, in percentage terms, since March 2008 -- following Tuesday morning testimony by U.S. Federal Reserve Chairman Ben Bernanke, during which the Fed chair said credit market write-downs were likely to slow the already anemic U.S. economy even more, Bloomberg News reported Tuesday. Economist Glen Langan told BloggingStocks OPEC's revised forecast is likely to represent another data point the oil bears will like.

Oil price key: Emerging markets

Amid the reports and cacophony of (seemingly) one bad economic news story after another, it's important -- perhaps essential -- to take time out to notice the good economic news stories out there.

And there are good news stories about business models, products, and services out there, because despite this period of extraordinary economic problems, the United States remains the most resilient, adaptable, and technology-advanced economy in the world.

An intelligent parking space system/service

One such good news story: smart parking technology, currently being tested in San Francisco.

This fall, San Francisco will test 6,000 of its 24,000 metered parking spaces in the nation's first large trial of wireless sensor network that will communicate which spaces are free at any moment, The New York Times reported.

Oil plunged more than $8 to about $136 Tuesday at mid-day after Fed Chairman Ben Bernanke's indicated the risks to U.S. growth have increased as a result of credit market losses, Bloomberg News reported Tuesday.

Oil fell $9.26 to $135.92 per barrel before recovery slightly. Oil hit a record of $147.27 per barrel on July 11.

The other major energy commodities, likewise, plummeted on the news. Heating oil plunged almost 15 cents to $3.91 per gallon, unleaded gasoline sank almost 17 cents to $3.39 per gallon, and natural gas plunged 44 cents to $11.51 per million BTUs.

"Oil in free-fall"

Energy trader Jim Dietz said "a mini selling frenzy" hit the oil market after Bernanke indicated the U.S. economy was likely to slow further.

"We did have some support for an oil-long trade earlier as an investment when few other investments are working, but that sentiment was quickly wiped out by Bernanke's comments," Dietz said. "We had oil in free-fall for about an hour. The market put 'two and two together.' We had the Fannie Mae and Freddie Mac bailout news yesterday [Monday] and Bernanke's bearish comments today. That led a lot of people to conclude we're going to see a slowdown in oil demand growth, which means lower prices."

U.S. producer prices soared a seasonally-adjusted 1.8% in June, the U.S Labor Department announced Tuesday, as rising energy prices continued to increase wholesale costs at an alarming rate.

Economists surveyed by Bloomberg News had expected the June PPI index to rise 1.4%. Producer prices increased 1.4% in May and 0.2% in April.

The core rate, which excludes food and energy costs, increased 0.2%, the Labor Department said, below the Bloomberg News 0.3% consensus estimate.

Economist Peter Dawson told BloggingStocks Tuesday the June PPI is another unfortunate data point for the economy, but it's not as bad as it appears. "The report is bad, but not as bad as it could have been. Energy really drove the index higher. If you took out gasoline prices, PPI would be down a half percentage point," Dawson said. "That said, energy prices are still rising at an alarming rate and they're a cost concern for businesses and individuals alike."

Oil's four-year bull run to +$140 per barrel has increased the wealth of 'petrodollar' nations, and is about set to propel another shift, this time in the bond market.

Petroleum-exporting nations, such as Saudi Arabia and Russia are set to become the biggest creditor nations to the U.S. Government, Bloomberg News reported Monday.

Holdings of petrodollar nations increased 44% to $510 billion through April, Bloomberg News reported Monday -- an increase pace that's set to displace Japan, which holds the largest amount of U.S. Treasuries, at $592.2 billion.

Oil rose about 20 cents to $145.28 per barrel in late Monday afternoon trading.

At first glance - - investigating whether OPEC will be able to stunt oil's rise to $150 per barrel may seem moot.

Not so, says energy trader Jim Dietz, and he cited three reasons.

First, the oil shorts - - those who believe oil is overpriced / too high - - are likely to mount a rigorous defense of $150. (Oil traded up $4.75 to $146.40 per barrel Friday at mid-day after hitting a record high of $147.27 earlier in the day.) "It will not be an easy barrier to mount. It will be easier to break than the $100 barrier but keep in mind it took several months and at least 5 sequences to break $100, once we got within the range," Dietz said. "Look for almost as tough price resistance at $150."

Second, many oil longs - - those who calculated that oil is trending higher - - will take profits at $150, Dietz said. "The $150 mark will result in many players and institutions cashing in their long trades, on rationality grounds," Dietz said. "For example, if you established trades at $80 or $85, common sense says $150 represents a good time to exit. Likewise for more-daring institutions that went long above $100. The thinking will be 'We're at $150 after a high entry point. How long do we expect this insanity to go on? Let's take some profits and reduce our exposure.' That will add to selling pressure." Dietz added that he is presently flat, or has no open energy trading positions - - his normal stance for a Friday in the summer.

Finally, those facts, combined with already-announced oil production increases by Saudi Arabia, will enhance OPEC's ability to slow gains in the price of oil near/at $150 per barrel, Dietz said. Further, Dietz believes Saudi Arabia will announce still another production increase, perhaps as large as 300,000 barrels, to calm markets, "and eliminate doubts in some energy corners about its spare capacity and ability to ramp-up production."

June import prices rose 2.6%, the U.S. Labor Department announced Friday, driven higher by rising petroleum prices and a falling dollar.

Excluding the often-volatile petroleum component, June import prices increased 0.8%, the Labor Department said.

Economists surveyed by Bloomberg News had expected June import prices to rise 1.8%. Import prices also rose a revised 2.6% in May; they increased 2.8% in April, and 3.1% in March.

In the last 12 months import prices are up 20.5% -- the biggest year-over-year increase on record, the Labor Department said. It's also a level that historically indicates that U.S. consumer price inflation will trend higher, due to price pressure from foreign goods/services.

Prices for imported petroleum were a major factor in the aforementioned price rise -- up 78.6% in one year.

Meanwhile, U.S. exports prices increased 1% in June, after rising 0.4% in May. Farm export prices increased 2.2%, while non-farm exports increased 0.9%.

Economist David H. Wang said the June import/export price report was yet another negative one for the U.S economy. "The report continues to feature the impact of record-high oil prices, which are boosting inflation just about across the price spectrum," Wang said. "Import prices are making the Fed's [U.S. Federal Reserve's] job of lowering inflation harder. The U.S. needs a substantial, sustained decline in oil prices to get control of inflation."

Oil rose more than $4 a barrel early Friday morning to a record $145.98 on concerns that Israel may be preparing to attack Iran and on supply concerns in Nigeria and Brazil.
[Update: Oil prices continued to climb, reaching a record of $147.03 a barrel, and this may not be the last update.]

Oil came within a whisker of $146 per barrel after Israeli fighter jets reportedly practiced over Iraq according to Iraqi and Iranian sources. This, however, was enough to increase speculation among traders that Israel is preparing to launch a military strike against Iran's nuclear facilities.

The United States and the European Union want Iran to end uranium enrichment, a technology that would give Iran the materials needed to produce a nuclear bomb. Iran says it wants the nuclear technology solely to produce electricity for civilian use. If one discounts oil sands, Iran has the world's second largest proved oil reserves, after Saudi Arabia.

Oil was also fanned higher by threats of additional Nigerian civil unrest and Brazilian oil union's plan to start a 5-day strike, Bloomberg News reported Friday.

The other major energy commodities, likewise, also jumped in early Friday morning trading. Heating oil surged 8 cents to $4.12 per gallon, unleaded gasoline rose 6 cents to $357 per gallon, and natural gas jumped 16 cents to $12.53 per million BTUs.

The International Energy Agency Thursday increased its 2008 global oil demand forecast slightly, citing China's oil demand, the agency announced.

In its monthly report, the IEA increased global oil demand forecast by 0.1% , or 80,000 barrels per day, to 86.85 million barrels per day. The IEA serves as an energy advisor to 27 industrialized nations, including the United States, United Kingdom, Germany, France, and Japan. Oil rose $1.03 to $137.08 per barrel in Thursday morning trading.

Economist David H. Wang told BloggingStocks Thursday he expects China's oil demand increase in 2008 to be "roughly in-line with the IEA's 5.6% growth forecast."

"China may end up registering oil demand growth less than 5.6%, if the Chinese Government continues to gradually increase the retail price of gasoline and diesel," Wang said. "My research indicates we are not seeing demand destruction yet in China, but this could change. Gasoline now costs about $3.30-$3.50 [per gallon] and if China approves another round of increases, demand could begin to be pinched, as it has in the United States."

Another gas price hike in China?

However, Wang said investors / traders should not assume another gasoline price increase nor lower oil demand in China. "China is trying to take pressure off energy prices and slow its economy, but there's only so much they can increase prices before they have serious consequences on its economy," he said. "The middle class can withstand the price increases but may others with lower incomes can not."

Northwest Airlines Corp. (NYSE: NWA) is feeling the heat of high oil prices like most of us, and announced 2,500 job cuts (8.3% of its workforce) yesterday evening. In addition to the job cuts, the regional air carrier will now charge $15 for a single piece of carry-on luggage. Want to redeem some frequent-flier rewards? It'll cost you another $100.

Northwest isn't the first (and won't be the last) to charge for almost any luggage brought on board by customers. With all the other (undisclosed) fees it will be adding to its services, the carrier said that it expected to add $250 million to $300 million a year in revenue. Sounds like what the telecom companies have been doing for years sliding in fees to prop up profits.

Northwest CEO Doug Steenland said, "These reductions are the direct result of our extraordinary fuel costs and the necessary actions we must take to right-size our airline and eliminate unprofitable flying." Regarding the frequent-flier redemptions, Steenland indicated that Northwest would charge $25 for domestic tickets, $50 for trans-Atlantic tickets and $100 for trans-Pacific tickets -- but did call the new frequent-flier service fees "temporary."

Boeing (NYSE: BA) Wednesday increased its 20-year forecast for global commercial jetliner deliveries for the sector by 2.8%, forecasting that demand for fuel-efficient replacement aircraft will outweigh capacity reductions by U.S. carriers.

Encompassing all airline manufacturers in the sector, Boeing now expects a market for 29,400 new commercial airplanes (passenger and freighter) by 2027, up 2.8% from its previous estimate of 28,600. Boeing added that the forecast factors-in the sector's near-term challenges, including a slowing global economy, surging fuel prices, slowing traffic growth in some markets, and a concerted action by airlines to lower costs.

Shares of Boeing (NYSE: BA) gained 25 cents to $66.18 on the news in Wednesday afternoon trading, despite a 131-point market sell-off in the DJIA.

Boeing added that single-aisle airplanes will make up the bulk of the sector's deliveries during the next 20 years. Strong domestic and intra-regional air travel growth in emerging Asia-Pacific markets, along with continued growth of low-cost carriers worldwide, is driving demand in this segment, the company said. Orders from Asia will comprise 31% of the deliveries; North America, 29%; and Europe/Asia, 27%.