Under the radar: Some trends are obvious enough and visible to all investors. Others are more-subtle, but are just as potent, and these often slip 'under the radar.'

Case in point: Saudi Arabia's oil exports to the United States have fallen to a 22-year low, at 745,000 barrels per day (bpd) in August, the latest month for which data is available, from 1.14 million bpd in July, according to data compiled by the U.S. Energy Information Agency. August's 745,000 bpd total is the lowest since December 1987. On a year-over-year basis (August 2008-August 2009), those exports are down about 50%.

Now here's a real important story. If you are an oil trader, chances are you traded the New York Mercantile Exchange West Texas Intermediate (WTI) contract. World pricing of oil by the biggest exporters was based on the WTI contract.

Now, suddenly, Saudi Arabia has decided to drop the WTI contract as the benchmark pricing unit for its oil. It is substituting a contract called the Argus Sour Crude Index, which will track the price in the physical market of a basket of U.S. gulf coast crudes, including Mars, Poseidon, and Southern Green Canyon.

Maybe days with no solid economic data are the best after all. The Saudis denied that OPEC was considered moving away from oil being quoted in US Dollars and gold put in new all-time contract highs. T. Boone Pickens was also out with his new 2010 oil price predictions this morning.

Here were today's unofficial closing bell levels:

Dow 9,731.25 +131.50 (1.37%)
S&P 500 1,054.72 +14.26 (1.37%)
Nasdaq 2,103.57 +35.42 (1.71%)

Analyst Calls: Top Upgrades and Top Downgrades
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Top Rumors of the Day

Over the past year there has been talk of replacing the U.S. dollar for oil transactions. On Tuesday, Britain's The Independent newspaper reported that secret talks were being held with Russia, China, Japan, and France to replace the dollar with a basket of currencies.

You are probably wondering: "When will this happen?" and "Which currencies will be included in the basket? In answer to first question the changeover would take place over nine years. The currencies to be included in the basket include the Japanese yen, the Chinese yuan, the euro, gold and a new unified currency planned for nations in the Gulf Cooperation Council, including Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar.

What this means is that oil will no longer priced in dollars.The article in The Independent claimed the U.S. is aware of the talks and is "sure to fight this international cabal."

In an unusual move, U.S. Treasury Secretary, Timothy Geithner, is making a special trip to Saudi Arabia. Why? Authorities in Saudi Arabia have recently withdrawn $50 billion of U.S. investments to reinvest at home. The Saudis are planning a $400 billion stimulus plan at home over the next five years.

With last year's record oil prices, the Saudis racked up a huge budget surplus. Much of that surplus of $500 billion is invested in US Treasury bills.

Earlier in the session we were looking at lower oil prices, but the mood has changed, and the precious crude is trading higher with the overall market today, picking up nearly 2.5% on the day.

Yesterday, despite rumors to the contrary, OPEC decided to leave its oil output alone, and this had the initial reaction of sending prices lower in early morning trading. With oil prices falling sharply since last summer, many analysts had been expecting to see a production cut from the group, but instead OPEC announced that it would be leaving its output unchanged, and stated that previous cuts were starting to take effect.

The oil market breathed a minor sigh of relief Thursday after Saudi Arabia said there would be no replay of 1973-74 regarding the current Middle East crisis.

Saudi Foreign Minister Prince Saud al-Faisal said oil "isn't a weapon" to end the conflict between Hamas and Israel, Bloomberg News reported. Prince al-Faisal said oil can't reverse the conflict, countering a call by OPEC-hawk Iran that Arab states stop producing oil as a way to pressure countries supporting Israel.

Oil continued its recent downward trek Thursday morning on the news, falling $1.58 to $41.05 per barrel. Oil hit an all-time of $147.27 per barrel in the summer of 2008.

In 1973, the Arab members of OPEC implemented an oil embargo against the United States in response to the U.S.'s decision to re-supply Israel's military during the Yom Kippur War, which Israel won. The price of oil subsequently quintupled from about $20 per barrel to about $100 per barrel in 2009 dollars (or from about $3 per barrel to $13 per barrel in 1974 dollars), creating the world's first oil shock, and triggering a U.S. recession.

The other major energy commodities also declined early Thursday. Heating oil fell 2 cents to $1.54 per gallon, unleaded gasoline decreased 3 cents to $1.07 cents per gallon, and natural gas dipped 5 cents to $5.92 per million BTUs.

The best part about oil's plunge below $40 per barrel in about six months?

A de-facto tax cut for American motorists. Each $1 per barrel drop in oil increases U.S. GDP by $100 billion per year and every 1 cent decline in gasoline increases U.S. consumer disposable income by $600 million per year.

Relief at the pump, finally

The drop in the price of regular unleaded gasoline, currently averaging about $1.60-$1.70 per gallon nationally, could not come soon enough for American businesses and consumers, according to economist Peter Dawson.

"With all of the cost pressures facing Americans, high prices for gasoline and oil were probably the worst, because energy drives up the cost of nearly everything else," Dawson said. "Retail inflation should moderate now, and the increased disposable income Americans will have will be put to good use." Oil fell again early Friday, down $1.91 to $34.91 per barrel. Oil hit an all-time high of $147.27 per barrel last summer.

There's modest good news on the gasoline front for U.S. consumers, but don't write (or e-mail or text message) home just yet.

Several key oil-producing nations are preparing for the prospect of $45 per barrel oil, indicating these oil exporters believe the price of the world's most important commodity is likely to fall more amid both U.S. and global economic recessions.

Saudis prep for oil's slide

Saudi Arabia, which possesses the largest proved oil reserves in the world, has passed a government budget that's prepared for $45 oil, stratfor.com reports. Meanwhile, Nigeria and Libya have reduced their 2009 oil price forecasts to $45.

Oil, which has plummeted more than 60% since hitting a record high of $147.27 this summer, fell another 48 cents to $58.85 per barrel in Wednesday morning trading.

Economist Richard Felson said the oil price plunge and the gasoline price drop it has created is good news for U.S. motorists, with certain qualifiers. "It is an astounding drop, approaching a $100 per barrel drop, and that has taken pressure off refined energy products," Felson said. "The problem is, if analysts are correct about $40-45 per barrel oil, it implies a slowdown in U.S. and global GDP that will likely mean large layoffs, which isn't good for anyone."

What a difference a year makes.

A year ago, October 2007, oil vaulted above $85 per barrel on its way to the unheard-of (at that time) price of $100 per barrel. Oil would reach a high of $147.90 per barrel in July.

Along the way several research reports predicted a $175-$200 price for oil in the near future. The weak dollar played a role in the astronomical price rise of the world's most important commodity, as did speculative and momentum players (hedge funds, investment funds), but the real culprit was rising emerging market oil demand.

Another October Surprise (of sorts)

Fast-forward to this October: emerging markets are still growing, but every other factor is now bearish for oil, says energy trader Jim Dietz, and oil's price is in free fall, plunging another $3.99 to $67.55 per barrel Wednesday morning. The United States economy is in recession -- not officially, but nearly every key indicator is. The U.K. and E.U. economies are slowing. Moreover, the financial crisis threatens to slow the growth in global trade, if not lead to outright trade volume declines, implying further declines in projected oil demand. "It's a market that's pricing in substantially slower global economic growth, possibly a global recession," Dietz said. He added that he was currently short oil, with a monthly contract.

Moreover, those searching for an oil bottom may be hard pressed, Dietz said. "There's considerable technical support for oil in the $63-67 range and then again at $60, but these barriers have not provided much support in this market," he said. "That leads me to believe that the unwinding [closing] of hedge fund positions is a big factor in driving oil lower. They're getting out of crude, big time."

Oil prices, the source of so much inflation and consternation in the developed and developing world, are expected to continue to slide toward $60, economists and traders say, even as OPEC prepares to cut production at a special meeting this week.

Oil has fallen about 50% since hitting a record high of $147.27 per barrel in July, amid a financial crisis that's slowed growth in every region of the globe. Further, OPEC, which produces about 40% of the world and will hold a special meeting October 24, will only able to slow oil's descent to the $60-range, with anticipated production cuts, so says economist Peter Dawson.

"The report that China's economy grew at a 9% annual rate in the third quarter is the last piece of the oil demand puzzle, as far as the slowdown is concerned," Dawson said. "China was growing at better than 10% in the same quarter a year ago, so that will further reduce the growth in global oil demand, which is bearish for oil prices. Prices will most likely slide toward the $60-range by mid-2009." Oil rose $1.35 to $73.20 per barrel in Monday morning trading.

August 2007. You remember the month.

Oil had zoomed through $70 on its way to almost $100 by year's end, and soon there were research reports arguing that oil would top $150 or even $200 in the year ahead, on surging global economic growth.

Few knew it then, but the month also marked the start of the subprime mortgage default problem -- first deemed isolated, then sector-wide in scope, and that now encompasses every corner of the globe, in the world's most serious financial crisis since the Great Depression.

Concern over the credit crunch and an accompanying slowdown in global economic growth sent oil prices below $70 Thursday for the first time since August 2007, with crude plunging $5.04 to $69.50 at mid-day. Oil has now fallen 53% since hitting an all-time high of $147.27 per barrel in July.

The other major energy commodities also continued their nearly month-long downtrend. Heating oil fell 11 cents to $2.07 per gallon, unleaded gasoline plunged 17 cents to $1.61 per gallon, and natural gas fell 6 cents to $6.65 per million BTUs.

OPEC again cut its forecast for 2009 global oil demand, the cartel announced Wednesday in its monthly report, raising the specter that hawkish cartel members will push for production cuts at a special meeting next month.

OPEC now believes (pdf) that 2009 global oil demand will increase by 800,000 barrels per day to 87.21 million barrels, compared to the previous forecast of a 900,000 barrel per day rise.

OPEC said its production in September averaged 32.16 million barrels per day, down about 310,000 from August.

Energy prices continue to fall

Energy prices retreated Wednesday on the news. Oil fell $3.44 to $75.21 per barrel. The other major energy commodities also fell in early trading Wednesday, continuing their nearly month-long downtrend. Heating oil fell about 5 cents to $2.20 per gallon, unleaded gasoline declined about 8 cents to $1.80 per gallon, and natural gas fell 7 cents to $6.66 per million BTUs.

In its report, OPEC said that even if governments are successful in unfreezing credit markets, the fallout in the real economy is expected to be considerable. The credit drag, combined with decelerating growth in both developed and developing world economies, will weigh on oil demand throughout 2009. OPEC has called a special meeting for November 18 to address what it argues is an oversupplied global oil market.

As national policy makers strive to unfreeze credit markets and end a global financial crisis that threatens to severely damage economies worldwide, Saudi Arabia will not defend an $80 oil price, and instead will let the price of oil fall, to reduce a critical cost stress on the global economy, economists and energy traders say.

Further, despite today's more-diverse oil market characterized by dozens of suppliers, any Saudi decision to not cut production will lower oil prices, Energy Trader Jim Dietz told BloggingStocks Friday.

Saudi Arabia possesses the largest, proven oil reserves in the world. The kingdom also has the biggest, quickly-marketable spare production capacity in the world, estimated to be 1.5-5.0 million barrels of oil per day, depending on the analysis.

'Saudis will let oil price fall, a lot'

"The Saudis are fully aware of the grave situation facing global financial markets and economies. The Saudis are going to let the price of oil fall, a lot. Other OPEC members like Iran or Venezuela may call for a production cut and try to protect their interest, but it's a non-starter, an after thought," Dietz said. "The Saudis know that every stimulative tactic must be used to keep commerce moving and eliminate stress and a lower oil price is part of that solution." (Dietz added that he had no open energy trading positions, his normal stance for a Friday.)

Oil fell $6.94 to $79.65 per barrel Friday at mid-day, as a near-panic atmosphere permeated markets as stocks plunged worldwide and U.S. stock markets declined for an eighth consecutive day. At 12:05 p.m. EDT, the Dow was down 313 points to 8,265 and the S&P 500 was down 38 points to 871.

"An $80 oil price is too high for this economy. It probably was too high for any economy, but that is a debate for another time. Right now, the oil market senses that the Saudis know the price of oil must go lower to reduce financial system stress," Dietz said. "And as the Saudis go, so goes the price of oil."

What's one energy word investors -- and oil/gasoline users -- should monitor?

Ghawar? That's right Ghawar -- a term you don't hear bantered about in the popular press or by major media outlets, but one that is pivotal to the health of the U.S. and global economies.

Located in Saudi Arabia, Ghawar is the world's largest conventional oil field. Oil's price has recently retreated from its latest climb to the stratosphere on slowing economic global growth concerns, but that pull-back, barring a financial calamity, is expected to be temporary -- at best lasting a year or two. Oil closed Friday up $6.67 to $104.55 per barrel. Oil hit a record high of $147.27 per barrel in July.

Oil's price is expected to resume its ascent when both developed and developing world growth return to normal GDP growth rates. Ghawar's significance? There has been chatter that the Ghawar oil field was beyond optimum; i.e., that its production had peaked.

Saudi Arabia has categorically and repeatedly rejected any contention that Ghawar's production has peaked. However, Saudi Arabia does not release field-specific production data.

Who provides the best analysis of Saudi oil production? Dozens of research firms abound, but the view from here argues that data provided by Cambridge Energy Research Associates and the International Energy Agency get high grades for accuracy.