Last year’s 54% drop in oil prices may have set the table for a rally similar to the one experienced in 1999, when prices doubled after a similar decline. The so-called “forward curve of futures contracts” traded on the New York Mercantile Exchange suggests prices will rise 28% this year, according to Bloomberg News.

The current curve looks almost the same as it did 10 years ago, when Russia’s default drove oil prices to drop as low as $10.82 a barrel in late December 1998 - a decline of nearly 40% from where they began that year.

At that time, the Organization of Petroleum Exporting Countries (OPEC) responded by cutting output by 1.71 million barrels per day (bpd), an amount equal to 7% of the group’s total supply, setting the stage for a 1999 rally in which prices more than doubled.

Fast forward to the present.

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In the energy market on Tuesday, oil broke over $50 but then retreated, with crude for February delivery closing at $48.58/barrel, down 23 cents. February reformulated gasoline gained less than ¾ of a cent, to $1.1892/gallon.

“The first attempt against the $50 psychological level is keeping a lid on this market,” said Burton Schlichter, of New World Trading.

But Phil Flynn, of Alaron Trading, was blunter. “Oil is running out of steam because at the end of the day the global crises have not cost the globe one drop of oil,” Flynn said.

Yet, one might add, as supply cuts haven’t really kicked in. Iran and Kuwait said they will deepen curbs on supplies to customers this month, joining OPEC peers in cutting back output, Reuters reported.

Source: Crude Little Changed

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At the moment, money is being sucked out of the financial system, bringing the threat of deflation. But for James Howard Kunstler, the only question is when the new money being pumped in by the Fed will exceed the amount that has disappeared. James says we could see serious inflation - and a slump in the US dollar - before the end of 2009.

This from Whiskey & Gunpowder:

This is the “other shoe” that a lot of people are waiting to drop. Right now we are caught up in a compressive debt deflation as mortgages stop “performing” and loans of all kinds are welshed on. Since money is loaned into existence, and a great many loans are not being repaid, then a lot of money is going out of existence. That’s what I mean when I say that capital is leaving the system.

At the same time, the Federal Reserve has made

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With the curtain closing on 2008, it’s time for me to take out my crystal ball and predict what will happen in 2009.

1- Even with a surge in the polls, due to the Israeli/Hamas conflict, both Ehud Barak and Tzipi Livni will falter badly in the upcoming Israeli elections, paving the way for former PM Benjamin Netanyahu to reclaim the title, Prime Minister.

2- Due to continued falling crude oil prices, Iran civil unrest will lead to an overthrow of Ahmadinejad.

3- The earth will continue to cool, and Obama will have to back off some of his environmentally friendly campaign promises.

4- As cracks form in the European Union and talk heats up whether the Euro will continue to exist as a currency, the US Dollar will make a strong move back to parity against the Euro.

5- US economic growth will rebound much earlier than expected, end of Q1, and we will

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Hello 2009.  What do you have in store for us? Will you finally put the immense problems of the economy behind you? What surprises are you going to spring on us?

Nobody gave me a crystal ball for Christmas. Then again it doesn’t take one to predict a lousy 2009. “More of the same” isn’t much of a prediction, is it? It’s more like a status report projected into the future.

I don’t believe in “more of the same.” Either things will get better or worse. The one thing they won’t do is stay the same. Here are six things I think will happen in ‘09.

1. The BRICs (Brazil, Russia, India and China) will have a terrible year. China will compete with the U.S. on who has the bigger government-led infrastructure program. They will also compete on whose is more effective. China’s will be building roads and schools. In addition

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“Global Demand for Oil to Plummet,” screams a recent Financial Times headline.   Huh?  No it won’t.  Who are they trying to kid?

Global oil demand is not going to “plummet.”  And for the FT to say so is just plain silly, if not irresponsible.  OK, I know.  There’s an old saying that they teach in journalism schools.  “You have to sell newspapers.”  But this declaration by the FT highlights the perils of letting a headline-writer do your thinking for you.  It’s what I call “arguing a screaming conclusion.”  And a wrong conclusion at that.

Oil Demand – Down, Then Up

But let’s move past the headlines.  The Financial Times article explains that the World Bank has just issued a new study.  The World Bank believes that the world is entering into the toughest economic times “since the Great Depression.”  Thus overall world oil demand may fall by about half a million barrels per

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All eyes are on the oil futures market today. As governments and industries across the globe adjust for drastically lower oil prices, investors are anxious to see how the crude market will react to the growing conflict in the Mid-East.

So far today, crude prices have jumped by near double-digit proportions, creating at least a temporary layer of support around the $40 per barrel level. As tensions increase along the Gaza Strip and Israel threatens with a strong and sustained ground attack, futures traders have all the ammunition they need to send prices higher… at least temporarily.

For fast-moving investors, the action has created a trading opportunity. Shares of the world’s largest oil producers opened higher thanks to a jump in crude prices. Exxon Mobil (NYSE:XOM) is up by just under two percent. Chevron (NYSE:CVX) and BP (NYSE:BP) are up by similar proportions.

A move of one

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It looks like a stupor-inducingly dull day in the market. I survived Christmas, though my Aunt's dog, Sidney, did not. In fact, it died at my house yesterday afternoon. Sidney was a very old dog, a good dog, and very loved, and will be missed very much.brbrEarlier in the day, we had fun. Along with presents, tons of food, and good friends, we played games. It's something of a tradition at my house.brbrMy team won this one: A href=http://www.amazon.com/Cranium-101010000-100E/dp/B00000DMBQ/ref=sr_1_1?ie=UTF8s=toys-and-gamesamp;qid=1230299863amp;sr=1-1strongCranium/strong/A. I highly recommend it, especially for competitive families who like screaming at each other in a mix of outrage and glee.brbrLater, I lost this one: A href=http://www.amazon.com/Rio-Grande-Games-4098395-Carcassonne/dp/B00005UNAX/ref=sr_1_1?ie=UTF8amp;s=toys-and-gamesamp;qid=1230299958amp;sr=1-1strongCarcassone./strong/A Doesn't matter -- it's a great game, and I'll win it another time. I bought A href=http://www.amazon.com/Vintage-Sports-Cards-Carcassone-Expansion/dp/B0009K6T2E/ref=sr_1_2?ie=UTF8amp;s=toys-and-gamesamp;qid=1230300041amp;sr=1-2strongCarcassone: Princessamp;Dragon Expansion /strong/Aas a gift for Cindy. She squealed with delight to find that under the tree.brbrHere's what I'm reading today (and so very little of it ...

UAE telecom Etisalat, as part of a consortium, won the bid for Iran's third mobile telephone licence. br /br /Etisalat was the first telecom operator in the Gulf to introduce a mobile phone service, and was one of the early adopters of GSM technology. Since then it has established itself as a regional pioneer by introducing both 3G and MMS, and most recently, a BlackBerry service in 2006

It was cloudy in the Algerian city of Oran on Wednesday…and a fairly pleasant 14 degrees in the open air… But the assembled leaders of the OPEC oil exporters’ cartel must have been feeling rather hot under the collar. Since hitting a peak of $147 in July this year, the price of oil has fallen by about $100. That has put the oil exporting countries under a huge amount of pressure. And now they are determined to drive the price of oil back up again.

Global oil production is set to fall sharply

On Wednesday, the cartel announced that it will slash daily oil production by 2.46 million barrels a day. That’s OPEC’s biggest production cut ever. What’s even more extraordinary is that some of the big the non-OPEC producers are now coordinating their production cuts with the cartel.

The Russians attended the OPEC meeting and they may cut announce their own

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