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

Oil fell below $66 on Friday, in line with broad falls on global markets after data showing the U.S. economy contracted and consumer spending had declined, with knock-on effects for fuel demand.

U.S. light crude fell 95 cents to $65.99 a barrel by 1325 GMT, pulling back from its gains ahead of the release of the economic data.

London Brent crude dropped by $1.43 to $68.68.

U.S. gross domestic product fell 1.0 percent in the second quarter, with consumer spending falling 1.2 percent, the U.S. Commerce Department said.

Although the contraction was smaller than expected the January-March GDP was revised down to a 6.4 precent drop from the previously reported 5.5 percent fall.

With the contraction in the second quarter, U.S. GDP has fallen for four straight quarters for the first time since government records started in 1947.

“The GDP reading did come better than expected, but the stabilisation is coming off a downward revised first quarter number,”

Global stocks slid anew on Tuesday as an uptick in German manufacturing orders failed to offset persistent concerns about economic prospects, worries that pushed crude oil down prices to below $63 a barrel.

Caution was the order of the day, with the dollar rising against the euro in a seesaw session in which risk tolerance rose and then fell as investors weighed the outlook for growth and corporate earnings.

Data showed orders in Germany, Europe’s largest economy, rose at the strongest monthly pace in nearly two years in May. But economists said the yearly comparison would remain weak for some time.

Euro zone government bond prices fell and the Bund future retreated from seven-week peaks as heavy European supply of almost 14 billion euro cut safety bids for bonds.

Another decline on Wall Street rekindled a safety bid for U.S. government debt, offsetting worries about demand for this week’s sale of $73 billion in

Stock markets came under pressure over the past few days as skepticism crept in that economic green shoots could be withering. On top of that, fears that the the US could be facing a credit rating downgrade (are the rating agencies now relevant again?) also caused losses for the US dollar and bonds.

These issues, together with another dose of discussion about the repayment of TARP funds, featured prominently in this week’s video clips. Commentators included in the selection below include James Galbraith, Jim Bianco, Robert Shiller, Sam Stovall, Bill Gross, David Rosenberg, Jim Rogers and Steve Leuthold.

The compilation kicks off with a top-quality interview with James Galbraith, saying that the banks can hardly lose but the rest of us aren’t so lucky, and concludes with the “American Casino” movie trailer.

Yahoo Finance, Tech Ticker: Galbraith - banks can hardly lose “Big banks have raised billions since the stress tests and policymakers

Wall St slides on bank jitters, earnings outlook caution… US dollar rallies broadly as equities worldwide tumble… Government debt shines on banking worries flare up… Oil drops over 8 pct on economic outlook, dollar rise

Oil prices and stocks around the world tumbled on Monday after a jump in troubled loans at Bank of America and renewed signs of economic weakness cooled investors’ optimism the worst of a global slowdown was over.

The U.S dollar rallied broadly to trade at one-month highs as the slide in worldwide equity markets boosted safe-haven demand for the greenback, U.S. and European government debt and gold.

Bank of America stock shed 17 percent after reporting its purchase of Merrill Lynch & Co helped to more than double first-quarter profit, but credit quality deteriorated sharply, hurt by a flagging economy and growing unemployment.

Also weighing on sentiment was a key gauge of

Eyes on U.S. jobless and retail sales data at 1330 GMT… U.S. crude stockpiles rise more than expected… IEA cuts global oil demand forecast…

Oil slipped further below $36 a barrel on Thursday as worries over the health of the global economy and forecasts for a hefty fall in global energy demand weighed on sentiment.

Global economic downturn is taking its toll on oil consumption and supply still appears to be outstripping demand in many parts of the world, despite production cuts by members of the Organization of the Petroleum Exporting Countries.

Oil prices continued to weaken despite a deal in the U.S. Congress on Wednesday on $789 billion in new spending and tax cuts.

U.S. light crude for March delivery was down 54 cents at $35.40 at 1124 GMT.

London Brent crude was up 21 cents at $44.49, stretching its premium

OPEC says willing to cut production further from March…  Impending U.S. stimulus package supportive…  Dismal U.S. jobs data still weighs on sentiment…

Oil climbed towards $42 a barrel on Monday after OPEC said it was willing to cut oil output further if needed to stabilise oil prices.

The market was also supported by a giant U.S. economic stimulus package that the administration of U.S. President Barack Obama is expected to get through Congress this week.

U.S. crude for March delivery rose $1.67 cents to $41.84 a barrel by 1448 GMT. London Brent climbed $1.45 cents to $47.66.

“If we think we still need more action, I’m sure the conference will take more action to stabilise the market,” the secretary-general of the Organization of Petroleum Exporting Countries, Abdullah al-Badri, told reporters in London. He was referring to OPEC’s supply policy meeting on

Russian gas deal, Gaza ceasefire ease supply concerns… World oil demand expected to fall in 2009… U.S. holiday leads to low trading volumes…

Oil fell more than $2 towards $34 a barrel on Monday after Russia and Ukraine signed a 10-year gas deal clearing the way for the resumption of supplies to a freezing Europe.

Implementation of a ceasefire between Israel and Hamas in Gaza also eased supply concerns as the market remained under pressure from expectations that the weakening global economy would erode oil demand.

“Right now the economy is dominating,” said Harry Tchilinguirian, analyst at BNP Paribas. “The market is very volatile and the signs are that demand is weakening.”

U.S. crude oil futures for February delivery dipped to a low of $33.89, down $2.62, before recovering to trade at $34.53 by 1800 GMT.

Traders said the February U.S. crude oil futures