The oil industry has been working hard to find new oil reserves, and so far this year the efforts have been paying off.

It has been a year with some major discoveries that have put the oil industry in a good position to make it the year with the highest level of new discoveries since 2000.

A big reason for the increase in discoveries is improvements in technology that has allowed oil hunters to drill deeper and break through tougher rocks than they were previously able to do.

Traders are selling oil off today after a government report that showed inventories rose last week.

Going into this week's inventory report from the Energy Information Administration, analysts had been expecting to see oil inventory drop by around 2.25 million barrels. What today's report actually showed though was an increase last week by 2.8 million barrels.

Oil traders have been flocking into the precious crude today as the U.S. dollar fell to a new yearly low against the euro.

Oil prices have passed through the psychological $70 barrier, and continued to move higher, currently trading up $3.12 on the day to $71.14. Oil is not the only commodity that has been moving higher, as gold prices moved through the $1,000 mark for the first time since this past February.

Oil traders have been selling off the precious crude Monday, as a steep sell-off of China's benchmark index raised concerns over the current state of both the Chinese and U.S. economies.

The Chinese Shanghai Composite Index took a beating to start off the week, trading down 6.74%, and raised fresh concerns over a global economic rebound. Today's sell off in the Chinese market was its biggest decline since June of 2008. The sell-off comes on the heels of a near 3% drop in the index last Friday.

Where does oil head from here? Well, short-term it heads up, but the price rise will have little to do with supply/demand fundamentals.

The world is awash in oil -- with storage tanks brimming -- but it doesn't matter. Once again, oil, the world's most important commodity, is taking on additional roles -- this time as a fiat currency, or substitute for the weak dollar.

Oil prices are moving strongly higher today following a government report that showed inventories dropped dramatically last week.

Today's report from the Energy Department indicated that oil inventories fell by 8.4 million barrels last week, in stark contrast to the increase of 1.2 million barrels that analysts had been expecting to see for the precious crude.

When we looked at oil prices yesterday, we noted that the market was going to pay close attention to today's inventory report from the Depart of Energy.

Oil was already weak after yesterday's report on consumer confidence, and today's oil inventory report showed a much larger than expected increase in oil inventories, pushing prices sharply lower.

Oil firm ConocoPhillips (NYSE: COP) reported second-quarter earnings of 87 cents per share this morning, barely edging the consensus estimate calling for 85 cents per share. Despite topping the consensus estimate, the results fell well short of last year's same-quarter earnings of $3.50 per share.

Quarterly revenue totaled $35.4 billion, which was less than half of the $71.4 billion earned a year ago. CEO and chairman Jim Mulva noted in the company's press release, "we delivered solid operational results during the quarter," despite lower commodity prices and margins in the second quarter.

Oil prices headed lower today following a bearish inventory report from the Energy Information Administration.

Over the past week oil prices have been moving higher, spurred by strong corporate earnings. Better than expected earnings by several big name companies has led investors to anticipate the economy has been improving.

Another stock leveraged to the oil market is Dupont (NYSE: DD). Because many of the company's products are derived from crude oil, rising oil prices negatively impact profit margins. The only recourse, then, is to raise the price for consumers. But doing so in this environment is unlikely given the weakness in the economy.

As a result, the dynamics of the market are such that profits for DD will be lower in the near term.

That puts the company in a bit of a Catch-22.

I take my absolute return approach to a deeper level by periodically buying and selling positions during the year. In late February, I suggested that investors cover the short position of Delta Airlines (NYSE: DAL) at $6.35 per share.

In my last update of the stocks on this list, I suggested that I would still be a seller of Delta. Shares of Delta did indeed lose value over the last three months. This move coincided with a blast in oil prices. Airlines are already struggling with a weak economy and excess capacity. Rising jet fuel prices make matters worse.

Here's a forecast that will knock your socks off. Professor Philip Verleger from the University of Calgary is predicting that oil will drop to $20 per barrel this year. This price was last seen in 2002.

He states that a surplus of 100 million barrels will accumulate by the end of the year.

Concerning the economy he said: "The economic situation is not getting better. Global refinery runs are going to be much lower in the fall. If the recession continues and its a warm winter, its going to be devastating."

Oil prices moved above $60 a barrel earlier in the day, but where unable to maintain their gains and have since dropped below the psychological $60 barrier once again.

Earlier this year oil had been making steady gains as investors bet on an economic recovery occurring in the second half of this year, but we are now in the second half of the year and a recovery is nowhere in sight. As a result, traders have started to focus more on the underlying fundamentals for oil, and this has led to a pretty steep sell off over the past couple of weeks.

Over the past couple of months we have seen oil prices move steadily higher, but the precious crude sold off Monday as economic concerns returned to the market.

What a difference a week makes. This time last week we were seeing increased optimism that the current recession was nearing its end, but those hopes were wiped out late last week by disappointing consumer confidence and employment data.

There is too much noise on Wall Street, and it becomes clearer with each passing day why some of the best money managers and investors in the world choose to do their business from somewhere else.

The most famous of all being 'my pal' Warren Buffett who has operated his business from the amazing "financial Mecca" of Omaha, Nebraska.

Today I wake up to the news that the market is down because oil is down because the world economy may not be healing as fast as many had hoped.