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

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

Many investors are somewhat dazed and befuddled as they watch what used to be called “The Natural Resources Sector” bounce up and down as the summer season commences.  With the dollar up again, commodities including the precious metals and oil were off sharply yesterday. All in all, it was just a broadly negative day. Little was spared, including equities, which also took a serious hit.  Even perennial bull James Moore, of TheBullionDesk.com, was forced to write that, “Short-term the metal [gold] could extend lower as a result of the dollar.”  John Reade, of UBS in London, concurred, writing that, “We would not be surprised to see further short-term declines, especially in the absence of any material jewelry, physical-investment or ETF demand.”

How do you put a happy face on that? Easy, according to the folks at Casey Research. “However, the current correction is likely to prove beneficial longer-term with the

In the energy market on Tuesday, crude for July delivery was little changed, closing at $70.47/barrel, down 15 cents. July reformulated gasoline rose 1.81 cents, to $2.0711/gallon. Oil followed the pattern of most of the other markets, posting early gains and then giving them all back.

“Commodities in general are seeing pressure as funds and individuals seem to feel that everything is overbought at this point,” said Zachary Oxman, managing director at TrendMax Futures. And, “Oil specifically seems strongly overbought.”

Commerzbank analysts concurred, writing that, “As the market was pricing in a rapid economic recovery, we think that the probability of a significant correction, taking place as early as in the coming weeks, is very high.”

But, of course, analysts have been saying that for weeks now, and crude has stubbornly resisted any big move to the downside.

Today brings the Energy Information Administration’s closely-watched stockpile report, and inventories are apt to