Oil Bulls Take a Tentative Peek Outside

(MoneyWatch)  News that Israel is moving into Gaza again appears to have spurred oil's advance back toward the $50 mark. And with a fresh new year ahead, plenty of pundits are eager to start predicting which way prices will go from here.

In one camp are the bears, who have been dominant for the past few months. As oil prices are often set on the margin and demand has already fallen by over 5 percent in many (perhaps most) countries, the bears argue that the expanding recession will depress prices below recent lows, to under $30 per barrel. Oil producing countries are, by and large, buying that argument.

But the price increase has also scared up a set of contrasting voices. Bloomberg says that the price curve of the past few months is a close mirror of ten years ago:

Bets on a recovery paid off then as the Organization of Petroleum Exporting Countries cut production 6.9 percent, causing prices to more than double in 1999. Now, OPEC is pledging to reduce supply 9 percent, companies from Royal Dutch Shell Plc to Valero Corp. are postponing new energy projects and central banks are cutting interest rates

In a similar vein, CNN Money points out that oil is up 38 percent since Christmas, and quotes a brokerage owner who says that lots of investors (bullish ones, it's implied) were "sidelined" at the end of the year -- but they're back in action now.

Over at the Wall Street Journal, the guys at Environmental Capital pull a much longer quote from a Barclay's Bank report, which first predicts the price of oil to be "fish", then blames its own $76 per barrel argument on current perceptions. Translation: When in doubt, it's best to be either contrarian or silly; that'll conquer Murphy's Law!

Yet they're not alone. Seeking Alpha has a list, which pits a small group of conservative voices, including Goldman Sachs and Deutsche Bank, against a larger group of cautious bulls that includes Barclay's, with a high prediction of $82 from Morgan Stanley. Consensus puts the price over $60 by year's end.

As an end note, gas prices may not necessarily reflect oil. One Motley Fool author predicts a combo of low oil prices and skyrocketing gas on the United States' West Coast. Perhaps the answer is "fish", after all.