I find it interesting that in the USA we are working with different numbers in regard to the support price of crude oil. The media as well. When we hear that the line in the sand is $55 Saudi, that really means $60 in US$, since that number apparently results in a price of $55 Saudi dollars. They are $5 behind our dollars. So if you hear $50 is their floor, $55 is our floor number. It sure would have been nice to have known since I hold a $60 put on crude for December with a 2K profit. I want to sell it based on a floor number.

The spot price of oil has been trading about $5 or so below the far out Dec2009 contract.

There is "last resort" support for this far out contract on the weekly chart around $60 - so this would correspond to $55 spot - if the relationship holds.

Everyone seems to be assuming $55 is the floor.
Funny though - when everyone assumes something - it often never happens.

If the spot price begins to fall again and these farther out contracts hold (or don't fall by as much) - maybe this $55 or so could be the bottom.

History says however that those who control the price of oil will move it where they want it. And there is still almost 1 month until the US Election.

There is a reluctance by the Fed to lower interest rates at least temporarily (to support the dollar) - so they may decide to just lower oil instead - it seems to be accomplishing the same thing.

I don't rule out $40'something oil myself.

I do have to say that the news today of an announcement by OPEC to cut 1m barrels of crude is not good news on its face. Eric Bolling said on Friday that he does not look at what OPEC says but rather what they do. He stated that when gas and heating oil start to move up, that would be a good time to look at the long side of crude oil.

I agree. But I'm still leaning to the bear side for now and will short any strong rallies in energy stocks - until this trade stops working.
I'll also countertrade long on day trades - as we are severely oversold now.

I guess the real question is: will these energy products do what they have done in the past 25 years and simply return to their point prior to the run up. (ie: $40 oil, $1 gasoline etc...)

Ngas did already (but it had its own set of speculative problems)

Or are we in a 70's type era where we establish a new higher floor for these products.

T- All that I can tell you is this. I live and work in the same neighborhood as Bill Gross, Warren Buffett, a Summer home, Peter Uebberoth, etc. I have always had 2-3 employees working fulltime along with me. Now I have one employee and I struggle to keep him busy. I was dead in March and April. My phone used to ring 5-10 times a week with good referrals. Now it is that in a good month. I am a hardwood floor contractor with a minor in macro economics. In other words, people with money are not spending. What does that have to say for the upper middle class and below? This is typical pre recession. I have been through it twice before. 1980-82 and 1989-93.