Analysts Ponder If Oil Bubble's Burst

Oil Recorded Another Drop Friday, Placing It Almost $20 A Barrel Lower Than Its Peak

(AP)  The price of oil recorded its biggest weekly drop ever, and a gallon of gas finally pulled back from its record high. So is it time to declare the energy bubble popped?

Experts won't go that far just yet.

"It's too early to say we've seen the worst of it," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, New Jersey "We would be Pollyannish if we believe one week represents a trend."

Still, with oil recording yet another drop on Friday, some industry experts who just days ago thought there was more juice left in oil's meteoric run are reconsidering.

"If this is not the bubble's implosion, than it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."

Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange - well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105 according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.

Some analysts said a nationwide average of $4 or even lower could be in the offing - almost unthinkable in a summer when there has seemed to be no relief at the pump - although they cautioned that there is no guarantee prices will stay low.

"We're going to see some relief from that relentless march higher," Kloza said.

Gas may be getting just a bit cheaper, but major changes in how Americans live and drive are already in motion.

Car buyers have been fleeing to more fuel-efficient models. U.S. sales of pickups and sport utility vehicles are down nearly 18 percent this year through June, while sales of small cars are up more than 10 percent.

While slashing production of more-profitable trucks and SUVs, automakers have been scurrying to build their most fuel-efficient models faster.

Toyota Motor Corp., which hasn't been able to keep up with demand for its 46 mpg Prius hybrid, said last week it will start producing the Prius in the U.S. and suspend truck and SUV production to meet changing consumer demands.

Ford Motor Co. and General Motors Corp. also have announced plans to increase small car production, and GM has said 18 of the 19 vehicles it is launching between now and 2010 are cars or crossovers.

Some brave traders used the week's pullback in oil prices as a chance to buy barrels that suddenly seemed to be on sale. But oil analysts were advising investors to beware.

"Buying here is an opportunity if you are a deep believer in $200 (a barrel), otherwise we think that caution would be better applied," analyst Olivier Jakob of Petromatrix in Switzerland said in a research note.

If oil buyers sense that the slide was overdone, you'll probably notice at the pump quickly.

"If (oil prices) rebound, you're going to see a quick reaction at the gas station, because their profit margins are so stretched," AAA spokesman Geoff Sundstrom said. "They may be very fast bringing prices back up."

In other Nymex trade, heating oil futures fell 5.23 cents to settle at $3.6915 a gallon while gasoline futures edged up 0.73 cent to $3.1709 a gallon. Natural gas futures rose 3.3 cents to $10.57 per 1,000 cubic feet.

In London, Brent crude futures for September delivery rose 88 cents to settle at $130.19 on the ICE Futures Exchange.

Ironically the Saudis have been Americas best friends, doing evrything they could to raise production, they tried to bring prices down, but the incessant and crazed Saudi and Muslim bashing by the Americans shows their constant hate and angry mentality towards the Saudis as if the Saudis owe them oil. Ironically Saudi Arabias largest oil company is ARAMCO acronym for Arab American oil company because it is run by Americans. One of the few allowed by any country, you all got kicked out of Venezuela a Christian country and the rest of the world hates you, I suggest reading some books and not be so ignorant and full of hate. Persoanlly I would not sell a drop of oil to you hateful fat lazy Americans.

[petro49l]

Not all oil is produced in the Middle East. Saudi propaganda is monopolistic and hostile. American Oil Companies should go elsewhere for the drilling operations. J.D. Rockefeller said it best. The American Consumer wants cheap gasoline. It makes sense to take the oil from a neutral site.

[850Rick]

Imagine a world where oil no longer exists.

Electricity runs everything because of it''s abundance, being had from the likes of water, solar, nuclear, coal, and wind generation. This could be our world in 100 years.

[850Rick]

American car companies that don''t want to change the way overseas companies are doing will one day soon be looking like the foregone conclusion American Motors Corporation, AMC.

As for the Saudi''s and all the rest, we should make them pay for all aid we send them. They want military assistance, buy it from us with oil.

[850Rick]

We should have just taken over Iraq and Iran, that is why we went there, and then called them our 51st and 52nd states.

At least then the Bush family would have it''s oil dealings in one country rather than three.

Hopefully we see a repeat of the late 80''s oil prices.

[txgrouch2006]

Hey, come to think of it OUR MILITARY IS ALREADY OVER THERE in Iraq. Seems like Iraq has some decent oil reserves. Why not TAKE OVER IRAQ''S OIL FIELDS and get something back for all the money we spent on the war???

Say now, THERE''S A SOLUTION THAT WOULDN''T TAKE TEN YEARS TO SHOW RESULTS.

Bottom line, perhaps Saudi Arabia would be wise to be more prudent about the kinds of threats they make.

[txgrouch2006]

Petro49L wrote
An attack by Israeli jets on a nuclear reactor would spark a conflict with the United States.
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Here''s an idea - while we''re there, let''s just ATTACK SAUDI ARABIA instead and TAKE THEIR OIL FIELDS for ourselves.

Then WE''D BE THE OIL RICH ONES, and the Arabs wouldn''t be able to lead us around by the nose anymore.

HOW''S THAT FOR STRATEGIC THINKING!

[petro49l]

The Saudis insist that the price for a barrel of oil will return to $150. If it takes a war with Iran, then that''s the ticket. An attack by Israeli jets on a nuclear reactor would spark a conflict with the United States. The Saudis are calling for the massacre of rank and file Arabs in Afghanistan. That move guarantees $200 for a barrel of oil.

[my2centss]

"The average price of a gallon of regular gas fell about a penny for the day"

What ever will I do with that windfall 20 cents? Now I don''t need to conserve gas anymore. Yippee!

[cyberus-2009]

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i hope all the speculators go bankrupt....

Posted by fstop100
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Dream on .. they''ll just write them off as capital losses.
Thats the problem with the system right now, they don''t really risk losing their arses and since they don''t actually have to accept the product they aren''t stuck with a load of overpriced product