I would just like to add a few items that I have been looking at the last few days.

On the EIA's international petroleum website they have a listing of what looks like all the major types of crude oil and their geographic locations.If we take $62 or $63 as the current price of oil, it is easy to see from this website that not a lot of current crude production is of the top-quality, WTI/Brent standard.

http://tonto.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm

The three Saudi grades listed range from $49-$55. Excluding the Malaysian Tapis Blend 44º at $65, the good stuff appears to be Nigerian Forcados at about $61. And we know 20% of that just left the market. Interestingly, the average price in the US, home of WTI/Cushing is only $51.43. Where did the other $10 go?

The point here is that the Nymex Futures/WTI spot price is based on a benchmark grade of crude. I believe Simmons addressed this subject recently. I will paraphrase. This is like tracking the price of automobiles by only looking at Rolls-Royces.

Second, every Thursday Bloomberg News conducts a survey of about 50 analysts and traders on what the price of oil will do in the next week. Recently I have been tracking this survey. What Bloomberg never tells you is the record the survey has. It has been wrong three of the last four weeks. Last week's results: of 49 analysts, 16 said the price would rise, 13 said it would stay the same, 20(or 41%) said it would drop.  I'm not sure what "stay the same" means, I count it as an abstention. Anyway, the consensus was wrong, the price went up.

It is also important to remember that although historically there has been no real trend in oil prices, it is becoming a widely recognized fact that the "cheap oil" is gone. It is costing more and more to find and "produce" oil. The price of oil rests largely on the initial production cost of that oil. This price is undoubtedly going up fairly drastically. In fact we know this anecdotally from the increased interest in tar sands and other types of non-conventional crude. But its effect on the long-term price of oil needs to be appreciated.