Yesterday, we took a look at falling oil prices, and that trend has continued today, sending prices below the $100 mark. As we mentioned yesterday, the selling was coming as traders have turned their attention to demand, and that is the same story that we are seeing again today.

Right now prices are trading just slightly higher than the psychological $100 barrier, at $100.31, but only a short time ago prices had retreated all the way down to $98.65.

One thing that we always like to keep track of is the weekly inventory reports from the U.S. Department of Energy. These reports are typically issued each Wednesday, and going into yesterday's report analysts had been looking to see a rise of 2.3 million barrels. While the market was given news of rising inventories, the numbers were actually much lower than had been expected, with an increase of 200,000 barrels.

Under most circumstances, a drop in demand in the US would bring oil prices down some. The recession should cut the amount of oil consumed here as drivers, airlines, and other big markets for oil-based products shrink.

It may not be that simple. Many analysts now believe that the amount of oil available is not quite so large as was hoped. Older fields are pumping less crude. There are fewer discoveries of large, new reserves, even off-shore. OPEC is not increasing production. Oil exporters are keeping more crude to power their own increasing number of cars and trucks.

According to The Wall Street Journal, the Bush administration now believes "prices will remain buoyant well after speculative investors head elsewhere, as the cost of finding new sources of oil continues to soar and demand in Asia and the Middle East climbs." If the view is right, even if interest rates fall, the US economy faces a multi-year problem with the pricing of its most critical commodity.

Oil prices have already beaten up the airline and car industries. Similar problems will begin to move into other sectors. Retail sales depend on buyers getting out and about. So does the tourism industry. Petrochemical-based products are used in everything from lubricants to plastics.

The Fed and Treasury can solve a lot of problems. Oil prices are not among those.

Douglas A. McIntyre is an editor at 247wallst.com.

As we discussed earlier today, oil prices had been falling this morning in anticipation of a bearish oil inventory report, and now prices are moving even more to the downside after the release of the actual report from the U.S. Department of Energy.

Earlier this morning, prices had dropped $2.90, but after the actual report became available prices have fallen even more, and are currently trading down $4.59 to $104.83. What is a bit surprising is that prices have extended so far even though the report was less bearish than had been predicted.

Analysts had been looking to see an increase of 2.3 million barrels, but the actual report showed that inventories rose "only" by 200,000 barrels. Usually, seeing a smaller than expected jump would lead you to believe that prices would rally, but the market has shifted a bit, and we are now seeing more attention being given to demand.

Oil prices have definitely been on a tear lately, but are losing ground today ahead of this week's inventory report, which is due out later this morning. Crude prices have dropped by $2.90 this morning, and are currently trading at $106.52.

So why exactly is the market selling off crude oil? Today's action is a result of anticipation over what we will see in this week's inventory report. Analysts are predicting that when the Department of Energy releases the current oil inventory report, we will see a rise of around 2.3 million barrels.

OK, I know what you are thinking. . . inventories have been rising for the past couple of months and prices have not been reacting. Well, that is true. In fact, if we do see a rise this week, it will mark nine out of past ten weeks where we have seen a rise in oil inventories. However, what makes this week a bit different is the fact that concerns over America's slowing economy have spiked once again, and possibly traders are going to start to focus more on the implications of a slowing U.S. economy.

Every day as I watch oil prices, I keep waiting for the market to take a breather and bring prices back down, but it just isn't happening yet. Prices are on the move yet again today, setting another new record, busting through the $110 barrier and hitting a high of $110.34. Currently oil is sitting at $110.23.

Today's move should come as no surprise if you keep up with the current situation surrounding the U.S. dollar. The dollar has been in a literal free fall lately, and is on the decline again today, with the fragile greenback falling to under 100 yen. In case you were wondering, this is the lowest for the dollar versus the yen in the past twelve years.

The main reason for what we are seeing is widespread fear that America is entering into a recession. Some well respected professionals, including billionaire Warren Buffett have said that while the current environment defies traditional definitions of a recession, America is basically already in a recession. The economy grew by 0.6% during the fourth quarter last year.

It seems like everyday we are seeing new highs for oil, and today is no exception, with prices hitting a high today of $106.42, and are currently trading up $0.84 to $106.31.

It is not surprising that as we see oil continue to head higher, we also have the other side of the coin that shows the dollar falling to new lows. As the market continues to push the dollar lower, you have to wonder just how high oil is headed? It took so long for oil to break through the psychological $100 barrier, and now, as Joseph Lazzaro pointed out earlier, there is already talk of a $100 floor for oil.

Last night we saw oil close at an all time of $105.47, and judging by the looks of things right now, we are going to be setting yet another record close again today. For now it looks as though there really is not too much that could turn the recent price surge around.

This week the market was impacted by a surprising decline in U.S. inventories, and the official (albeit expected) announcement from OPEC that it would not be lifting production quotas. Look for oil prices to remain strong at least until the middle of next week, and depending on next week's inventory report we could easily be looking at $110 oil. Scary... but definitely not out of the question at this point.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.

Oil prices are moving to the upside again today, adding to yesterday's strong gains to trade up as high as $105.97 a barrel.

On Wednesday, oil prices surged on two basic factors. The first being a decline in U.S. inventories (the first in eight weeks), and the second being OPEC's decision not to adjust its production quotas. While the inventory report may have come as a surprise to some, the OPEC decision was mostly expected, as the oil cartel had been hinting all along that it was not in favor of lifting its output.

The primary reason though why traders are pushing prices higher is Wednesday's inventory report. Analysts had been expecting to see an increase for the eighth-straight week, but instead were served up data that showed crude supplies dropping by 3.1 million barrels.

Oil prices rose to new highs today, with crude moving up as high as $103.95 earlier in the session, before cooling off slightly. Prices are now trading at $103.36, up $1.52.

There are two main driving forces today that are pushing prices higher. The first is the continued weakness of the U.S. dollar, and the second is the general consensus that OPEC will decide to leave output unchanged at this week's meeting.

First, taking a look at the dollar, today it hit a new record low versus the euro. The dollar continues to suffer as world markets prepare for a possible recession hitting America this year. With America's economic slowdown on traders' minds, the dollar continues to fall as many expect that the Federal Reserve is going to be forced to cut interest rates even further to keep the economy moving. Of course, any rate cuts will only further weaken the already struggling currency.

Oil closed up $1.65 to $100.88 Tuesday -- a new record-high print close -- as traders piled into the world's most vital commodity on the belief it will serve as an inflation hedge if U.S. inflation accelerates this year.

Oil had hit an intra-session high of $101.11 earlier in the day before pulling back slightly. (Oil hit an all-time high, in inflation-adjusted terms, of $102.80 per barrel in April 1980.)

Energy commodities close up

The other major energy commodities also closed higher. Heating oil gained about two cents to $2.79 per gallon, unleaded gasoline climbed about one cent to $2.54, and natural gas gained about one cent to $9.19 per million BTUs.

Independent energy trader Jim Dietz told BloggingStocks Tuesday that the market is not taking into consideration oil's bearish fundamentals, which show rising inventories in several key categories, but is trading more on psychology: namely, ambition.

After oil prices traded momentarily above $101, prices are down a bit today in anticipation of a bearish oil inventory report coming later in the day. Traders have shaved 31 cents off the price of oil today, down to $99.39.

Oil has definitely been on a strong run over the past two weeks, picking up close to $15 as investors have been rushing into the precious crude as a hedge against possible rising inflation. Adding more concern to the market were comments from the Federal Reserve that indicated we would be looking at low interest rates for some time to come.

As Joseph Lazzaro pointed out to our readers yesterday, the Fed has not only raised its inflation estimates, but at the same time announced that it is is expecting to remain in an environment of low interest rates. What does this mean for the oil market? Simple -- low rates typically lead to a weaker dollar, which in turn props oil prices higher. Basically, the Fed has overridden fears of a slowing economy impacting oil demand, and instead created the general impression that $100 oil is here to stay.

When the Federal Reserve finishes up its two-day meeting this afternoon, it is widely expected that we will be in store for at least another 50 basis point cut, and possibly more. In anticipation for another cut, oil prices have moved higher today, picking up $0.59 to $92.23.

It was just last week that the Federal Reserve made the decision to step in with an emergency 75 basis point rate cut, but the consensus on Wall Street is that another rate cut is coming today, with the intended goal of putting a curb on America's slowing economic landscape. Oil traders appear to be banking on news of lower rates, and that has resulted in today's upward move in oil prices.

Since America is currently the world's largest oil consumer, any economic slowdown occurring in America will definitely have an impact on global oil demand. As recession fears have become more widespread since the start of the year, oil prices saw a 10%+ correction, falling from a recent $100 a barrel down to nearly $85 last week.

Oil has been moving to the upside today following a very bullish inventory report from the Energy Department. Oil for February delivery has moved higher by 76 cents to $90.84 and earlier in the session traded all the way up to $91.48.

The reason for today's move was a very unexpected decline of 7.6 million barrels of crude supplies last week. Heading into today's report, analysts had been expecting to see a drop of only 1.5 million barrels.

The gasoline portion of the report turned out to be bearish though. Analysts had been looking to see gasoline inventories rise by 700,000 barrels, but the actual results showed an increase of a whopping 3 million barrels during the week.

When we took a look at the current oil picture this morning, we noted that analysts were expecting to see an 800,000 barrel increase in oil supplies last week. Well, that was not to be, and instead the US Energy Department just announced that inventories actually dropped by 1.1 million barrels.

With prices already trading near to the $100 mark, today's report could be just what the market needed to break through the psychological barrier. Before the report came out, prices had actually moved into the red on the day, but quickly rebounded back into positive territory, currently trading up 0.16% on the day to $98.20.

For about the past month now it has looked as though $100 oil was on the horizon, but could today finally be the day that we do indeed see prices crossing through the psychological $100 barrier? Don't be too surprised if it is, with prices already trading above $99 ahead of today's inventory report.

Later this morning we are going to get a very important piece of information from the US Energy Department when it reports last week's inventory numbers. Analysts are expected to see a rise in inventories of 800,000 barrels, but the market has been acting as if it believes we will not see this much of an increase. With prices flirting so close to the $100 mark you can be sure that if inventories do come in below expectations we will be reading about $100 oil before the end of the day.

We will also be watching for gasoline supplies. On average, analysts are expecting to see a 700,000 lift in gasoline inventories in this week's report. While gasoline did fall a bit last night, we are still looking at a national average of $3.09 for a gallon of regular unleaded. This is an amazing increase from the average this time last year when prices at the pump were $2.24, but down from the high of $3.23 we saw back on May 24.

Today's inventory report should be out 10:30 AM EST, and we will post the results as they become available.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

Oil prices have once again set a new record today, with prices moving as high as $97 a barrel earlier in the session, and are currently trading up $2.73 to $96.63.

Today's move comes as traders are becoming increasingly worried about supply concerns as winter weather has finally started moving across the Northern Hemisphere. So far this year, mother nature has spared us from onslaught of wintry weather, but now that is changing, and the market is reacting. The past two weeks we have seen greater than expected declines in crude inventories in America, and analysts are expecting even more drops to be announced tomorrow when the Department of Energy releases its weekly inventory report.

Analysts are expecting to see a drop of 1.6 million barrels, and if we get reports of anything greater than that I would not be surprised at all to be sitting here writing about oil at $100 before the week is out. Consider this, before last week's report, prices were trading down to around $90.50, so a move from current prices to the psychological $100 barrier is not by no means out of the question.