We’ve all been so distracted by the financial-sector activity last weekrecently, I’m only now catching up on what’s happening recently in oil prices. Pretty interesting stuff.

You’ve got upward price pressure from the after-effects of Hurricane Ike – David Enke and James Hamilton each covered that story on Seeking Alpha. But you’ve also got selling pressure on oil futures as a result of Lehman’s unwinding its positions – Barron’s Stocks to Watch Today blog explains that one.

Long-term, clearly the demand for oil only continues to rise until its replacement alternative-energy source emerges. But it should be pretty fascinating to see what the short-term effects of this push-and-pull might be. Certainly there’s at least one short-term benefit: among other factors lower oil prices are helping lower inflation, according to the WSJ. Well, I’ll take a little relief wherever we can find it…

[image: Vintage oil cans & service station lights by northbaywanderer on flickr]

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The way I see it, I believe oil will stabilize at $100/barrel over the long term.  The key here right now is for the credit markets to thaw so people can borrow (and do so responsibly).  Meanwhile, research into alternative energy can continue until suitable replacements for oil can be found.

My advisors said to BUY BUY BUY energy stocks, so I did, and now I'm in shock. Total losses at 48%.  They say that oil prices will soar again, real soon. I'm out of money. I won't sell and take these losses, so I guess I'll just wait and see. Each day I think they can't go any lower.

I don't drive much, so the 50 cents a gallon decline at the gas pumps doesn't impress me.

Does anyone really know what will happen? Has the market bottomed out? Will energy stocks go back up? We all still own and drive cars that run on gasoline.  What a contradiction:  I want low gas prices, yet I want the energy stocks to soar again!  How crazy is that?!

Sorry to hear you've had a rough run, April. I do agree with K-Man that we probably still have several years of active oil usage left, even with the most aggressive alternative energy plans, so chances are good that demand will pick up again. When, of course, is “the $64,000 question.”

These short-term trends in oil prices are definitely curious. In addition to the factors I mentioned in my post, you also have short-term demand for oil dropping as economies around the world slow their production. Meanwhile in Charlotte, where we have a second office, we've seen outright gas and oil shortages due to Hurricane Ike's damage to oil refineries serving our part of the country. For a few weeks there we were limited to $40 purchases at a time and lining up to buy gas. Lots of factors in play...

Opec has moved up their november meeting to next week.  What effect, if any, do you guys think it will have on crude prices? 

I expect Opec to cut production.  I think oil has been over sold and may experiece a nice bounce here soon, but with the volatility here lately, who knows.

Thoughts or opinions please.