As China's huge population graduates from bicycles, what is going to happen to oil prices? China -- still lacking in domestic oil infrastructure -- is going to compete against the United States to buy oil on the international market. The new destination of the oil tankers leaving the gulf could be China, not the U.S.

Americans usually move from a bicycle to a car around the age of 16 when they get a driver's license and money to buy their first car. And as China's middle class grows, so will the desire to move beyond bicycles. Whether it's a scooter, motorcycle or a car -- it is going to use gasoline.

Or will it?

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.

Bank of America downgraded oil firm Chevron (CVX) Wednesday to neutral from buy, setting a target price of $90 per share for the stock. This downgrade comes a day after the company announced plans to "improve returns" and streamline the company's organization and portfolio.

Among the actions in this undertaking is staff reductions that will take place through 2011, with 2,000 positions on the chopping block for this year. The downgrade comes after Tuesday's meetings, which prompted Bank of America to say that CVX "had little new to influence an investment case that has been reassuringly consistent in recent years." The brokerage recommended Exxon Mobil (XOM) as a "better value" over the near term.

Let's just say OPEC is in an enviable position.

Come to think of it -- when hasn't OPEC been in an enviable position? OPEC heads into its December meeting next week "in the catbird seat," to cite an old phrase popularized by the late, great Red Barber. OPEC does not have to cut production to keep prices high -- they're already high: oil closed Friday up 40 cents to $73.05 per barrel. The roughly doubling of oil's price in 2009 is the main reason the average U.S. gasoline price for unleaded regular has risen about $1 to $2.60 per gallon this year.

Oil prices have been on the rise today, following a government report that showed inventories fell more than expected last week.

Going into today's inventory report, analysts had been expecting to hear that oil inventories shrank by around 2 million barrels last week, but according the the Department of Energy the actual draw was much steeper at 3.7 million barrels.

According to the International Energy Agency (IEA), global energy use is going to fall this year. That said, the group also believes that energy use will resume its upward trend, should government policies remain the same.

Looking far ahead, the IEA believes that the world's demand is projected to rise by 40% between now and 2030, when demand is estimated to hit 16.8 billion tons of oil equivalent.

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.

They say you should buy low and sell high, which is easy to say but hard to do. How low is low and how high is high?

Sometimes technical support and resistance levels can be helpful in finding those highs and lows. Right now oil stocks like Exxon Mobil Corp. (NYSE: XOM), PetroChina Company Ltd. (NYSE: PTR) and Chevron Corp. (NYSE: CVX) are just bouncing off support that may be the "low" many traders are looking for.

The past two weeks we have seen oil prices steadily trade higher, but the sellers came out today in reaction to rising concern over consumer confidence and pushed prices lower.

Oil dropped under $67 a barrel today as Wall Street learned that consumer confidence had dropped for the second straight month in July. A major reason for low consumer confidence can be attributed to rapidly rising unemployment in the country.

Why is OPEC expecting a sharp drop in oil prices? First, much of the rise in oil prices has followed the rally on Wall Street. Investors reasoned that higher stock prices means that business is doing better and hence a need for more oil, and prices rise.

Not so fast. Business demand for oil is weak, and the consumer got clobbered by the recession and is holding back spending money. So the classic relationship between the stock market and oil that investors follow is not there this year.

What is the current supply/demand for oil going forward? OPEC is saying that it will take five years to bring demand back to pre-recession levels.

In 2008 average consumption of OPEC oil reached 31 million barrels per day. We will not reach that mark until 2013. Demand for non OPEC oil is expected to remain flat at about 45 million barrels per day.

So now with less demand, there is less desire to invest in new capacity. OPEC had previously planned to spend $165 billion dollars in new capacity. Now they have scaled back these numbers to $110 to $120 billion into the year 2013.

In Rome last May, the International Energy Agency feared that lower investments in capacity would lead to severe future shortages.

Why did China raise its gasoline and diesel prices? Beijing has a pricing policy that uses a 22-day moving average of crude oil. With the price of crude oil trading at around $71 per barrel, China felt it necessary to raise the price of gasoline and diesel fuel 9% and 10%, respectively. This will raise the price of a gallon of gasoline to $3.00 per gallon, compared with the U.S. price of $2.66 a week ago, according to Reuters news service.

With economies around the world gaining ground this quarter, it follows that demand for crude oil is also increasing. So far we've seen a doubling of oil prices since last February. The main concern is, given the pace of recovery, is there a point where demand for crude oil and gasoline will taper off. If so, we may be looking at an intermediate top in oil prices. However, if world economies continue to improve, crude oil could move to $75 to $80 per barrel.

Oil moved up above $70 early in the session, but was unable to hold that momentum through the day. After its strong start to the day, prices dropped $2.19 to $67.83.

A major reason for the drop in prices can be attributed to the World Bank. The World Bank slashed its forecast for this year's global economic growth, and reported that the current recession is deepening.

Earlier this week we were looking at oil prices, and wondering if we would see the precious crude break through the psychological $70 barrier, and that is exactly what we saw today.

For the first time since last November, oil prices were briefly above $70 today, moving up as high as $70.32 before profit taking pushed oil prices down on the day. We finished up the week at $68.44, down 37 cents.