One half expects the late, great writer/director Rod Serling to show up at OPEC's next production meeting in Vienna in March.

"Consider, if you will, the plight of OPEC, a cartel so driven by greed that they choked off the very source of their wealth and continued income. OPEC now faces a reality in which that very selfishness will continue to work against the cartel, a reality that doesn't resemble any world they've known, but one that we often find in 'The Twilight Zone.' "

Is the end of OPEC at hand? Perhaps not, but the cartel is facing its most serious crisis in more than a decade, so says economist Richard Felson.

Oil fell more than 3.5% to $39.40 per barrel early Friday, as another large increase in U.S. layoffs and the unemployment rate posed the specter of additional reductions in U.S. oil and gasoline consumption.

Oil fell $1.77 to $34.40, and the price has now decreased more than 10% in 2009 and more than 55% from a year ago. In the summer of 2008, oil hit an all-time high of $147.27 per barrel.

The other major energy commodities also fell in early trading Friday, continuing their nearly month-long downtrend. Heating oil fell about 2 cents to $1.34 per gallon, unleaded gasoline declined about 3 cents to $1.24 per gallon, and natural gas fell 7 cents to $4.57 per million BTUs.

Oil rallies a few days in a row, and bingo! -- already there's talk regarding an oil bottom.

True, oil has rallied more than 40% -- it traded at around $45 early Tuesday after touching $32.40 per barrel about a month ago -- but investors may want to hold off buying oil futures contracts or venture forth with oil-related stock plays. And the reasons are both technical and fundamental.

First, technical analysts almost universally agree that 'a bottom' is a process, not an event. In other words, don't expect it to happen in a day, or a week; typically, a bottom can take weeks -- and sometimes even months -- to form. Second, oil has two price hurdles up ahead: the 50-day moving average at $46.27, and the psychologically-important $50 level. If oil can clear and close above each level for three consecutive days, that would be bullish, but we're not there yet. And until it does, the oil bears will have much technical evidence to argue that oil's current rally is largely a short-covering rally.

Oil is not a 'partisan' commodity, at least not at this juncture.

Democratic or Republican administration, oil continued its march lower, declining another $1 Tuesday to $33.30 per barrel on continued concerns about weakening global demand. Oil fell about $1.70 on Monday.

The other major energy commodities also declined early Monday. Heating oil fell 8 cents to $1.40 per gallon, unleaded gasoline decreased 7 cents to $1.10 cents per gallon, and natural gas dipped 17 cents to $4.62 per million BTUs.

Energy Trader Jim Dietz said Tuesday the weak U.S. economy, a higher dollar, and the resolution of two international energy-related issues points to significantly lower oil in the weeks and months ahead.

Economist David H. Wang, who grew up in China but moved permanently to the United States in 1989 for graduate study, is a fan of both traditional Chinese and contemporary American cuisine. And among his favorite American entrees is the classic porterhouse steak dinner.

On Tuesday Wang spent part of the day reading the restaurant reviews of some of New York's world-class steak houses. (We won't list the restaurants' names in this space: they would represent free plugs, and each has a business strong enough to pay for an advertisement.)

Almost reservation time

Wang reviewed the steakhouses' menus because he is likely to win a wager with yours truly, involving the price of oil. I argued that the price of oil would never drop below $40 per barrel again. Wang argued it would, and would also remain below $80. The wager calls for the loser to buy the winner a dinner in every year the price of oil drops below $40 or rises above $80.

Now back in May the wager looked like an 'easy win' for me: oil was sitting pretty, with a price above $110 and arcing ever higher. It looked like economist Wang would be buying dinners for many years in a row.

Over the past few weeks, as the full dimensions of the economic meltdown have come into focus, most analysts have concluded that the financial crisis is the child of numerous parents, including predatory lenders, deregulating legislators, and excessively optimistic borrowers. Even so, the vast majority of the responsibility has managed to attach itself to the financial industry.

While taking the blame for tanking the economy, establishing Republican socialism, and possibly destroying Western Civilization, Wall Street has had its own problems. As the major players in the financial industry have crashed and burned or been eaten up by other, lesser players, the streets have been filled with the saddest form of performance art. Once arrogant masters who strode the universe on the southern end of Manhattan have become masters of the cardboard box, carrying their personals home to overpriced condos that were purchased at the height of a real-estate boom. The dive in the housing market, which has already hurt so much of the country, has only threatened New York; right now, fingers are crossed from TriBeCa to Harlem.

In the midst of this, Doubledown Media held its annual Wall Street Boxing Charity Championship in New York's Hammerstein ballroom. Admission prices ranged from $125 for general seating to $10,000 for a ringside table, and the event raised money for two charities: a youth village in Rwanda and Tuesday's Children, an organization that serves the families of 9/11 victims. The fight card featured professionals from some of Wall Street's biggest names; for anybody who is particularly interested, the winners included a guy from Deutsche Bank, a guy from Citi, and a guy from the NYMEX. The guy from Morgan Stanley lost in a decision.

In the oil market, as in the U.S stock market, there are fundamental analysts and technical analysts.

Fans of fundamentals follow things like inventory levels, global oil demand, and refinery capacity. Fans of technicals follow things like the 50-day and 200-day moving average and chart formations (double tops, double bottoms, etc.).

Moreover, rarely do these two analytical schools merge in one trader: you're usually either a fan of fundamentals or technicals.

A 'hybrid' trader

Energy trader Jim Dietz breaks the mold. He's a hybrid trader, of sorts. He primarily follows fundamentals, but gives technical analysis its proper respect, and currently on the chart are two, technical oil price levels that are worth paying attention to, as they are likely to provide clues regarding oil's direction, he said. Dietz added that he is presently flat, or had no open energy trading positions.

Oil, Dietz said, "has closed below support in the $115-116 range for two days in a row." Tuesday would be the third, if it closes below $115, and if it does, that would be bearish for oil, he said. Oil was down 29 cents to $112.58 in mid-day Tuesday trading.

Hedge funds and speculators reduced positions in oil by 80% as prices rose to records and as U.S. regulators started investigating trading, Bloomberg News reported Monday, citing government data.

Net long positions decline to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27, 2008 from a record 127,491 contracts on July 31, 2008 according to a U.S. Commodity Futures Trading Commission report.

Last week, the CFTC, under pressure from Congress, announced that it had expanded an investigation of oil's price rise and oil futures contracts. Oil has increased about 100% in the past 12 months, and about 480% since 2002. Oil rose $1.50 to $128.50 per barrel in mid-day Monday trading.

Politicians this week have come up with a brilliant plan. Oh, let's blame the recent oil price hike on speculators, why don't we? This way, we can continue not doing anything about energy prices and oil's scarcity and still keep our jobs. Let's just deflect attention from us and our inaction and blame it all on those commodity traders.

Okay, of course, anyone who manipulates oil prices, inflating them artificially and causing us to pay $4 a gallon at the pump as a result while making a nice juicy profit on our backs, should pay. No doubt. But here's a thought: what if these speculators are doing us a service?

I'll use a line from Syriana: "It's running out." We all know it. At some point there will be no more oil, or it will become so scarce that $4 a gallon will sound like a joke, like my grandma telling me about those five-cent movie tickets (I still think she was pulling my leg!). And barring any alternative energy found to heat our homes, fuel our cars and power our factories, it is not difficult to envision doomsday scenarios.

So perhaps, instead of reaching that crucial stage and having to start scrambling for solutions then, perhaps the recent oil price hikes have done us more good than harm. It put the problem of oil and energy in the forefront; it made the problem too big to be ignored, brushed aside. Indeed, there has never been this much news and these many resources diverted to alternative energy as there has been in the past year (at least it feels that way).

The high price of oil has repercussions throughout the economy; it trickles down to the smallest of items and we've only been experiencing the beginning. The effect on prices is lagging. Still, only Wednesday Dow Chemical (NYSE: DOW) announced a price increase of up to 20% to offset these higher costs. Dow's CEO blamed Washington for not listening to industrialists when they demanded action for years.

CME Group(NYSE:CME) is recently trading down $45 to $440.26. CME' s clearing member, MF Global-(NYSE- MF) , is recently down $11.10 to $6.23. The CME announced an offer of 0.323 share and $36.00 per share to acquire NYMEX(NYSE:NMX) this morning. CME March 440 straddle is priced at $41.05. CME April option implied volatility of 57 is above its 26-week average of 35 according to Track Data, suggesting larger risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Oil closed Wednesday up 73 cents to $100.74 per barrel -- a new record high close -- in a session anxious to hear Thursday's report on weekly U.S. inventories. Oil had traded at a print record $101.27 earlier in this session.

The weekly Wednesday oil inventory report will be released this week on Thursday, one day late, due to the Presidents' Day holiday. Oil closed above $100 for the first time in its history Tuesday, at $100.01.

"It's been a wait-and-see market today, for the most part," independent energy trader Jim Dietz told BloggingStocks Wednesday afternoon. "Neither bulls nor bears seem to want to make a major stand ahead of the inventory report, but we did trade above $100 again. If we close above it today, that would be a bullish sign." Dietz added that he is currently flat -- or has no open energy positions.

Crude oil traded at a record printed trade of $100.10 per barrel Tuesday before closing at $100.01 on talk that OPEC will cut production when it meets March 5.

Other major fuels also rose: heating oil soared 10 cents to $2.75 per gallon, unleaded gasoline vaulted 11 cents to $2.60 per gallon and natural gas gained 30 cents to $8.96 per million BTUs.

In inflation-adjusted terms, oil hit an all-time high of $102.80 per barrel in April 1980.

'So much for the bears'

Oil has rallied more than 15% since the yearly low of $86.99 on January 23, and it's giving oil bears like independent energy trader Jim Dietz fits.

CME Group is preliminary talks to buy energy/precious metals market Nymex, CME announced Monday, in a statement.

Under terms being discussed, CME Group Inc. (NYSE: CME), the world's largest derivatives exchange, would pay Nymex Holdings, Inc. (NYSE: NMX) $36 per share in cash and 0.123 of a CME common share, which would value the deal at about $11 billion, Reuters reported Monday.

Nymex shares rose $9.01 to $116.17 on the news, while CME's shares fell $12.77 to $616.01 in Monday afternoon trading.

CME Group was created in July 2007 via the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade in a $9.3-billion deal. Nymex, which is short for the New York Mercantile Exchange, went public in November 2006.

Oil fell $2.01 to $88.56 per barrel Monday in electronic trading on the New York Mercantile Exchange - - pushed lower by a major sell-off in stock markets in Europe and Asia, amid increased concern that a weak U.S. economy will prompt a global economic slowdown.

Oil is down more than 11% since briefly trading above $100 at $100.09 on January 3, 2008. Oil hit an all-time high, in inflation-adjusted terms, of $102.80 per barrel in April 1980.

Oil fell after global equities markets sold-off amid both increased concerns that the world's other major economic regions will be hurt by the U.S. economic slowdown and talk of additional write-downs/asset losses stemming from the U.S. subprime mortgage sector.

The Finanical Times reported that shares in China plunged 5.1%, Hong Kong shares sank 4.5%. In Europe, London's FTSE dropped 5.5% to 5,578.20, the German Dax plunged 7.2 to 6,790.19, and France's CAC-40 sank 6.8% to 4,744.45.

Oil fell $1.69 to $93.98 per barrel Thursday morning as traders re-calibrated their positions on sentiment that both oil and gasoline consumption growth will moderate during the expected U.S. economic slowdown.

Heating oil dropped four cents to $2.57, unleaded gasoline fell five cents to $2.38, and natural gas declined five cents to $8.15 per million BTUs.

Independent energy trader Jim Dietz told BloggingStocks Thursday that Goldman Sachs' warning that the U.S. economy is "probably slipping into a recession" sent the worst fear possible into many oil bulls -- the fear of a changing dynamic in the oil markets.

The Goldman effect

"The Goldman report hit the market hard. Traders now sense that oil product demand, particularly gasoline demand, will moderate in the months ahead, which takes pressure off prices," Dietz said. "There's also a sense in the market now that the giddy oil market is over, that you can't count on making an easy pop [quick, 50-cent gain] each morning no matter where your long entry point is. Traders are getting much more careful about their entry points."