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."

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."

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%.

Oil fell more than $5 to $136 per barrel Tuesday morning as concern about a global economic slowdown prompted traders to conclude that oil demand growth may slow in the quarters ahead.

Oil fell $5.11 to $136.26 per barrel -- a drop that brought its two-day decline to more than $8. (Oil is still about 90% higher than a year ago, and about 400% higher than in 2000.)

The other major energy commodities, likewise, plunged for a second day, in early Tuesday trading. Heating oil plummeted 14 cents to $3.83 per gallon, unleaded gasoline fell 12 cents to $3.36 per gallon, and natural gas plunged 45 cents to $12.53 per million BTUs.

Some bloom off the energy rose?

Economist Peter Dawson said investors and traders are taking a harder look at the energy picture, in light of recent corporate and economic data points. While underscoring that "it's always difficult to try to evaluate events in motion," Dawson said a protracted recession in the U.S. combined with a global slowdown "would take some of the bloom off the energy asset rose."

Apparently rock musician Sammy Hagar is not one of U.S. Sen. John Warner's (R-Virginia) constituents.

Sen. Warner has suggested that the U.S. Congress might want to consider reimposing a national speed limit to save gasoline and possibly ease fuel prices, The Associated Press reported.

However, Warner has not specifically sponsored legislation calling for a roll-back to 55 miles per hour: he has only asked U.S. Energy Secretary Samuel Bodman to research which speed limit would provide optimum gasoline efficiency given current technology, and also wants to know if the Bush Administration would support a Congressional effort to mandate a lower speed limit, The AP reported.

Last 55 mph law: 1973-74

The United States last imposed a 55 mph speed limit in 1974, as part of an effort to conserve gasoline in response to the world's first oil shock, the 1973-74 oil crisis.

OPEC President Chakib Khelil Monday blamed the U.S. Federal Reserve for sky-high oil prices, The Associated Press reported, adding that surging prices are not likely to decline.

Khelil said he believes the declining dollar has pushed oil higher and that the Fed's interest rate reductions to boost the U.S. economy are the primary reason for the dollar's decline, the AP reported Monday.

In an effort to jump-start the U.S. economy slowed by the nation's worst housing slump in a generation, the Fed has cut short-term interest rates by 325 basis points to 2% since September 2007.

Khelil's comments did not push oil higher as of early Monday afternoon. Oil traders looked past those comments and focused on the dollar's rise for the day versus the euro and pound, and new data points suggesting a deeper, longer U.S. recession, energy trader Jim Dietz told BloggingStocks Monday. Oil fell $3.70 to $141.59 per barrel, with futures hitting a daily low of $140.15 earlier in the day.

Oil traders adopt 'defensive' stance

"Right now the oil market is focused on the U.S. economy not OPEC's comments, and many were spooked by the Freddie Mac and Fannie Mae announcement. Everything is in pullback mode now, oil, stocks, gold, other commodities. The mood is defensive...preserve capital, basically," Dietz said.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) may have to raise up to $46 billion and $29 billion in capital, according to Lehman Brothers (NYSE: LEH), Bloomberg News reported Monday. Fannie Mae fell $3.17 to $15.61 while Freddie Mac declined $2.51 to $11.99 in Monday afternoon trading.

Oil fell more than $5 to about $140 per barrel Monday morning after Iran's foreign minister expressed confidence in talks with western governments regarding the nation's nuclear program, Bloomberg News reported.

Iran's foreign minister Manouchehr Mottaki told CNN talks are "in a new environment" and "new approaches" are possible.

A rising dollar Monday morning also helped push oil lower. The dollar strengthened against the euro and the British pound on expectation G-8 industrial leaders will verbally support the dollar at an upcoming economic summit in Japan.

Oil fell $5.14 to $140.15 per barrel Monday morning before recovering slightly to $141.30. The other major energy commodities also plunged in early Monday trading. Heating oil plummeted 13 cents to $3.97 per gallon, unleaded gasoline fell about 10 cents to $3.47 per gallon, and natural gas plunged 42 cents to $13.16 per million BTUs.

Economist Glen Langan, who argues that fundamentals (primarily rising demand) are the major factors determining oil's price, said legitimate progress on the Iran uranium enrichment issue would ease traders' concerns about Iran's supply. "Iran is still OPEC's No. 2 producer and a major exporter of oil, so lasting good news with regard to Iran will ease traders minds about tensions in and near the Persian Gulf. That will take some pressure off prices," Langan said. About 20% of the world's oil flows through the Persian Gulf and the Strait of Hormuz.

The dollar rose to its highest level in more than a week Monday morning on talk leaders at the G-8 summit in Japan will support the currency in an attempt to halt rising commodity prices.

The dollar strengthened about one-half cent versus the euro to $1.5629 and about 1 cent versus the British pound to $1.9659 in Monday morning trading. The dollar also rose about one-half yen to 107.66 versus Japan's yen.

Ian Stannard, a senior currency strategist at BNP Paribas SA (NASDAQ: BNPQY), France's largest bank, told Bloomberg News Monday that support for the dollar in the form of verbal invention continues, driven by the thesis that a stronger dollar, globally, is in everyone's interest.

Many economists agree that a falling and weak dollar has been a factor in rising commodity prices. Oil and other commodities tend to rise when the dollar falls as investors / traders seek to preserve purchasing power of the decreased value of dollar-denominated commodities by bidding their price up. However, economists differ regarding the extent of the weak dollar's commodity-inflation impact, with some arguing it is only a mild factor.

'Actions speak louder than words'

Further, economist Peter Dawson told BloggingStocks Monday, dollar bulls should not feel too emboldened by a verbal stance by the G-8.

Another day, another oil record.

Oil easily pushed past $145 Thursday morning after traders calculated that the already weak dollar has further to fall after the European Central Bank increased a key interest rate by a quarter point to 4.25%.

Oil rose as much as $2.28 to $145.85 per barrel -- an all-time high -- before easing back slightly to trade at $144.40 at mid-day.

Oil tends to rise when the dollar falls as investors/traders seek to preserve purchasing power of the decreased value of dollar-denominated commodities by bidding their price up. However, it's important to note that the dollar/oil correlation is not perfect: there have been instances in which the dollar fell and oil fell.