The number of traders betting that oil prices will drop outnumbers the number of traders who believe they will rise by the largest margin ever. Some analysts believe prices will fall significantly lower in the near future – at least into the low $60 a barrel range – after soaring to $75 a barrel in August.

Supply has outrun demand this year as a global recovery has yet to accelerate. Yet, oil prices more than doubled from February to August and are up about 50% from where they started the year.

Now, many traders are positioning themselves to profit from a pullback. The gap between prices of options betting on a decline in prices and those that would profit as a result of a rise in oil has widened to a record 10 percentage points, according to five years of data compiled by Banc of America Securities-Merrill Lynch.

Put options, which give traders

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Reuters examines oil prices: with an OPEC meeting imminent, crude prices have stabilized, as analysts expect to see the group agree to maintain its 'official output target stable around $70'.  Russia is surpassing Saudi Arabia in oil exports for the first time in the wake of OPEC production cuts.  'In no uncertain terms, Russia has been the biggest beneficiary of OPEC's sacrifice', says strategist Chris Weafer.  Saudi Arabian Oil Minister Ali al-Naimi believes that the current crude prices - between $68 and $73 a barrel - are acceptable for producers and customers alike.  Energy Minister Sergei Shmatko has met with Iraqi Prime Minister Nuri al-Maliki in an attempt to pursue Russia's aim of reviving Saddam Hussein era oil deals.  President Medvedev says that Russia must refuse requests for Ukraine to prepay natural gas transit fees, (with Kiev prepaying more than ...

In the energy market on Thursday, crude for July delivery continued to climb, closing at $65.08/barrel, up $1.63. June reformulated gasoline rose 1.88 cents, to $1.9105/gallon.

In its weekly inventory report the Energy Information Administration said that crude stocks declined by 5.4 million barrels in the week ended May 22, wildly divergent from Platts’s expectations for an increase of 1.8 million barrels.

Gasoline supplies dropped by 600,000 barrels, while distillates rose 300,000. Refineries were operating at 85.1% of their operable capacity last week, up sharply from 81.8% in the prior week.

“In the coming weeks, I look for crude stocks to continue to decline as refiners ramp up for summer,” said James Williams, of WTRG Economics.

Meanwhile, at its meeting in Vienna, OPEC chose to leave production quotas unchanged, with Saudi Arabian Oil Minister Ali al-Naimi saying output targets were unchanged because “prices are good, the market is in good shape.” Oil

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Existing Home Sales Up 2.9%; Malaysia’s Economy Shrinks 6.2%; Staples Beats Estimates; U.K. Millionaires Halved by Financial Crisis; Treasury Yield Spread Hits Record High; Intel Won’t Cut Dividend After Euro Fine; Moody’s: U.S. Aaa Credit Rating Stable; Oil Surges to Six-Month High

Existing home sales in the United States ticked up 2.9% in April, according to the National Association of Realtors. The report suggests the housing glut is turning around, but from the bottom up. “Most of the sales are taking place in lower price ranges and activity is beginning to pick-up in the mid-price ranges, but high-end home sales remain sluggish,” NAR chief economist Lawrence Yun told reporters, Reuters reported. Malaysia’s economy shrank 6.2% in the first quarter on slumping exports, making for the country’s first contraction since 2001. “We expect the first ...

Today, the price of oil rose to a six-month high of $63.45 and the national average price for a gallon of regular unleaded gasoline rose to $2.655. In the last month alone, the price for a barrel of light crude oil increased approximately 25%. Is this the peak of the rally or should we expect even higher prices?

According to Saudi oil minister Ali al-Naimi, prices will keep increasing since demand is “picking up, especially in Asia”. Nuaimi said, “You bet we’re seeing it (increased demand) from some of our customers for more oil and we’re providing it… There is a lot of optimism in what I am saying because I see the recovery coming.”

Just this month, two different OPEC spokesmen have stated that oil has to go to at least $75 per barrel, otherwise production will either be cut, or would not be increased when the world economy expands, which

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Asian benchmarks followed the big advance on Wall Street Tuesday after a jump in U.S. consumer confidence boosted confidence and reassured investors that the turnaround is imminent.  Japan's benchmark Nikkei 225 stock average rose 1.4% to 9,438.77 while Hong Kong's Hang Seng jumped 5.3%, to 17,885.27.

On Tuesday, U.S. stocks shot higher for the first time in five sessions as the Conference Board's consumer confidence index rose sharply in May, refueling hopes that the consumers are getting more optimistic about the economy.  The surprise rise in consumer confidence, which vaulted to 54.9 from 40.8 in April, offset dismal housing news and put investors back on buying track.  Traders, back after a long weekend, bought enthusiastically pushing every industry group on the S&P 500 stock index higher.  Nevertheless, declining home prices served a reminder that the economic outlook is yet to show signs of stabilization.  The consumer confidence index jumped

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Experts roundly agree that the recession is only a short-term blip in the long-term escalation of oil prices. And this time, there are 1.05 trillion reasons why oil is going to climb well past its peak last year.

Table of Contents:

Oil Production: Why OPEC’s Keeping a Lid on Production Oil Prices: Why Crude Thrives on the Diving Dollar Oil Outlook: The Coming Oil Price Shock Investing in Oil: The Best Companies, Stocks and ETFs

Oil has staged an impressive rally since dropping below $35 a barrel in mid-February. And while there remains a risk that prices will retreat further due to sluggish demand, there are also three very compelling reasons why oil is still a safe long-term bet:

OPEC has made substantial progress in reducing the amount of oil on the market. The dollar has been made vulnerable by the U.S. Federal ...

IEA predicts 2009 oil demand growth after 2008 contraction… Saudi Nov oil output complies with OPEC target-oil min… Expectations of deeper supply cut by OPEC next week

Oil rose above $45 on Thursday after the International Energy Agency predicted global growth in oil demand would resume in 2009 and Saudi oil minister said OPEC’s top exporter pumped less oil than expected last month.

World oil demand growth would return in 2009 after shrinking this year for the first time since 1983, the IEA, which advises 28 industrialized nations on energy policy, said in a monthly report. It also cut forecasts for supply outside OPEC next year.

“We knew the bad bits, demand down, but the supply downgrade was supportive,” said Rob Laughlin of MF Global.

U.S. crude was up $2.23 at $45.75 a barrel by 1152 GMT, after surging $1.45 to settle at

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In the energy market Monday, oil prices tumbled, with crude for January delivery closing at $49.28/barrel, down $5.15. January reformulated gasoline lost 9.84 cents, to $1.1112/gallon.

Crude marked its biggest one-day drop in nearly two months, and settled at its lowest closing price since May 23, 2005.

Traders reacted to an OPEC announcement over the weekend that the cartel has deferred a decision to reduce output until its next regularly-scheduled meeting on December 17.

OPEC will use the time to assess the impact of a 1.5 million-barrel-a-day reduction agreed to in October, but slowing growth means demand will be “much lower” than expected a month ago, the cartel conceded after Saturday’s emergency gathering in Cairo. Nevertheless, “for sure there will be action” in December, secretary general Abdalla el-Badri said yesterday.

“OPEC sent a valentine to the bears,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “It looks like

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Oil down more than $2 after no cut from OPEC… OPEC to discuss 1 to 1.5 mbpd cut later in December… Saudi Arabia cites $75 a barrel as “fair price”

Oil fell more than $2 to below $53 a barrel on Monday after OPEC decided to wait until mid-December to make another cut in output to try to defend sagging prices.

U.S. light crude for January delivery was down $2.28 at $52.15 a barrel by 1200 GMT.

Oil had settled at $54.43 on Friday after a shortened post-Thanksgiving holiday session. On Nov. 21, it touched a three and half year low of $48.25.

London Brent crude was $2.05 lower at $51.44 a barrel.

“The markets are discounting OPEC’s decision to stand pat by selling off,” said Edward Meir, analyst at broker MF Global.

“When it comes to calibrating supply and demand

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