It is clear that oil futures markets do not see real shortages post 2010. Hedge funds don't make long term assumptions, they mostly look for and ride trends. However, many investors in US E&P's are quite aware of po theory, and many of these, including myself, are investing on this basis.  THe problem with futures is you can be right in the long term and get crushed short term.

My own preference, shared by many, is to invest in small US E&P's with low cost, growing reserves and earnings. These are companies that, by my definition (which counts reserves equally with earnings), are not yet fully valued in the marketplace.  As such, they are usually bought at some point by larger companies having difficulty increasing their reserves; four of my former picks were bought last year. My current favorites are ard and gpor because, in addition to having the highest rating based on my own formula, analysts are projecting record earnings to continue at least through 07 based on oil prices somewhat lower than today's.

I avoid companies with foreign assets. Revenues are generally stable while price is steady because the host country needs expertise and capital that they don't have. However, when price jumps, the host country thinks foreigners are making too much from the national treasure, and accordingly reneges on the contract, raises taxes (often retroactively), or both. Russia, Venezuela and Bolivia are recent cases in point. So, the investor may (or may not) retain his investment, but does not share in the price increase. And, it is anticipation of price increases that attracts po believers to oil and gas investments in the first place.

Regarding gas, the current NA overhang caused by last year's warm winter has held storage at record levels, and the record looks to continue through the first week of Nov, usually the last week that gas is added, and maybe througout the winter unless significantly colder than usual. As a futures contract moves towards the front, it comes face to face with real supply and demand vis a vis the spot market, at which point it has, for months now, crumbled. Futures players are still thinking that gas and oil are bound by their traditional relationship based on heat value. However, the record storage, combined with the ongoing departure from the US of fertilizer and plastics precursor manufacturers, is causing a rolling crash of gas prices.  There may be a crash in NA production in a few years, but profits will be under high stress for several quarters. Meanwhile, long investors in gas futures contracts have been losing money quite steadily since the first of the year, and imo this will continue for some time.