People have been scratching their heads wondering why the price of oil has held up relatively well this year in the face of a global slowdown and decreased energy demand in the United States.

Fundamentalists will point to continued strong demand for oil from emerging markets like China and decreasing oil output from non-OPEC producing nations such as Russia and Mexico. But then we have the conspiracy theorists who say the only reason that oil prices are so high is due solely to huge quantities of oil being held offshore in tankers by those greedy oil companies in order to boost their profits.

First of all, why would anyone want to store oil in tankers and not sell it? After all, it costs money to charter those oil supertankers. Storing oil in tankers does make sense if the price difference between crude oil sold for immediate delivery and the price on oil

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After earning hefty profits on its commodities trading for nearly 18 years, heavyweight trader Goldman Sachs Group Inc. (NYSE: GS) now finds itself on the hot seat, defending this crucial source of revenue. And while that may not be good for Goldman, it’s also bad for investors.  Let me explain…

It all started back in 1991, when J. Aron & Co., Goldman’s commodities-trading division, recommended that a large institutional client invest about $100 million in commodities.  The vehicle “du-jour” was Goldman’s own investment vehicle, the Goldman Sachs Commodity Index (now the S&P GSCI Commodity Index).

The GSCI is a 24-commodity dollar-weighted index, comprised of 70% energy (oil and natural gas), 8% industrial metals (aluminum, copper, lead, nickel and zinc), 3% precious metals (gold and silver), 14% agriculture (wheat, corn, soybeans, cotton, sugar, coffee and cocoa) and 4% livestock (cattle and hogs).

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[Editor's Note: If it's inflation you're worried about - and commodities you want to invest in - there's no better place to look than the Global Resource Alert trading service, which ferrets out companies poised to profit from the so-called “Secular Bull Market” in commodities. If you’re new to the commodities-investing arena, and are uncertain about the landscape – or even if you’re an “old hand” at natural-resource stocks, but want some insights into the new profit plays and new players – consider hiring a guide: Money Morning Contributing EditorPeter Krauth, a recognized expert in metals, mining and energy stocks, who is also the editor of the Global Resource Alert. A former portfolio advisor, Krauth continues to work out of resource-rich Canada, which keeps him close to most of the companies he researches. Against the growing global financial malaise, Krauth says that commodities are among …

Oil is trading well over $70 a barrel - at its highs for this year - and just off nine-month highs of $73.20, seen last October 21, oil has been steadily rising. Oil prices have risen nearly 100% since their $38 a barrel lows seen last January.

Unfortunately - at a time when consumers can’t afford a wallet drain - retail gasoline prices across the United States have risen to $2.55 a gallon on average, and over $3.00 a gallon in places like California.

As you drive by the gas station and see the now familiar price changes - sometimes by the hour - you might wonder what’s really affecting the price you pay…

Investors, of course, want to know if there’s a good way to play the price moves. Let’s take a look at the two biggest drivers of oil prices and ways you can play its movements.

Oil Prices Rise As Production

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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 ...

The popular oil ETF has grown so large its monthly trades have a major impact on oil markets.

The Commodities Futures Trading Commission has confirmed with a variety of news sources that it is has launched an investigation into the trading activity of the United States Oil Fund LP (NYSEArca: USO). Specifically, the CFTC is looking at USO's trading activity on February 6, when it rolled its entire portfolio of oil futures contracts from the March contract to the April contact. It should be noted that the concerns about USO are actually just one facet of a wider investigation into the oil market and trading practices. 

At the time of the trade, USO's management strategy called on it to roll its entire portfolio of West Texas Intermediate contracts from front-month contracts to the following month's contracts on a single, prespecified day; in this case, February 6. Considering that USO held more

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When it comes to the oil markets, volatility is the name of the game. After seeing prices of nearly $150 a barrel last summer, oil prices have dropped to about $45 a barrel. Will prices move higher anytime soon? 

Not likely.

As you can see, Light Crude Oil ($WTIC) has formed a nice little downwards channel trend that stretches back all the way back from its November highs.

Combined with a Slow Stochastic (bottom of the chart) and the Relative Strength Indicator (RSI) (top of the chart) that show oil as approaching overbought, the indication is that oil prices will move down.

This morning, oil prices reacted negatively against that trend channel and lost value.

This confirms that the bearish trend line should continue and that we should see lower oil prices in the weeks ahead.

A great way to play this situation is to

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Oil prices have fallen 70% since hitting a record $147.27 a barrel in July, which means in just five months, crude has given up all the price gains it made in the past four years.

After such a wrenching plunge, many analysts believe the outlook for the “black gold” remains bleak – and in the short term it certainly is. In the long run, however, dwindling supplies, resurgent demand, and a lack of investment will cause crude oil to double, triple, or even quintuple in price over the next few years.

In fact, the Paris-based International Energy Agency (IEA) – energy advisor to 28 industrialized nations – says oil will rise to $100 a barrel by 2015, as a result of a major “supply crunch,” and will ultimately soar to $200 a barrel.

But before it does, prices are likely to sink even further, perhaps falling as low as $20 a barrel in

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Oil prices could fall as low as $20 a barrel in early 2009, says Jason Simpkins. But don’t expect these low prices to last long. Dwindling investment will prompt a longer-term supply crunch, which will send crude to new record highs. Jason gives seven ways to profit from this coming spike.

This from Money Morning:

Oil prices have fallen 70% since hitting a record $147.27 a barrel in July, which means in just five months, crude has given up all the price gains it made in the past four years.

After such a wrenching plunge, many analysts believe the outlook for the “black gold” remains bleak – and in the short term it certainly is. In the long run, however, dwindling supplies, resurgent demand, and a lack of investment will cause crude oil to double, triple, or even quintuple in price over the next few years.

In

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