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

In the energy market on Tuesday, crude for August delivery fell off, closing at $69.89/barrel, down $1.60. July reformulated gasoline lost nearly 4 cents, to $1.8972/gallon. The quarter ended with a net gain of 41% for crude. It was the biggest three-month advance since Saddam Hussein’s invasion of Kuwait in the third quarter of 1990.

Analyzing the day’s action, Phil Flynn, of Alaron Trading, said that, “All of the rising demand expectations got doused with the number on falling consumer confidence … This is key ahead of the big Fourth of July holiday as it increases fears that people will stay home instead of travel.”

Also weighing was that the U.K. GDP decreased 2.4% in the first quarter from 4Q08, the Office for National Statistics said in London, rather worse than forecasts for a slippage of only 2.1%.

With a holiday weekend looming, analysts have little in the way of prediction

After an unparalleled fall, natural gas prices could double by next year, as a growing number of idle rigs create a supply crunch.

Natural gas prices have tumbled by about 30% this year, as a steep drop in industrial consumption has undermined demand. However, many of the traders and hedge funds that placed speculative bets on the price decline are beginning to reverse course and bet on a price spike, as dwindling production is starting to outpace slumping demand.

Traders trimmed their net short positions on gas by 11% to 114,064 in the week ended March 10, the smallest since last July, Bloomberg News reported. Also, natural gas futures for delivery in January 2010 are trading at a 49% premium to the April contract, which means speculators are anticipating a price surge.

In its short-term energy outlook - released on March 10 - the Energy Information Administration said

The price of oil, which has been on a rollercoaster as of late, has once again dropped. This time oil prices dipped below $75 a barrel today, which is a new 13-month low. A gallon of regular gas fell nearly 4 cents overnight to a new national average of $3.125, according to auto club AAA. Signs are not pointing to an increase in demand after the gasoline price drop.

The Organization of the Petroleum Exporting Countries (OPEC) said rich nations in 2009 are expected to need only 400,000 barrels a day more oil than this year. Total oil consumption dropped in developed countries by more than 1 million barrels a day as of September over a 12 month period. Could this be the outcome of a mass attempt at conservation?

When the skyrocketing price of oil shot through the roof in July, reaching an apex of $147.27 on July 11,