Updated post ...
A few months ago Sean Tully of Fortune Magazine was on Kudlow and Company and offered the thought that crude oil would go to $50-$70 a barrel before too long as that level represents the marginal cost of production and commodity prices often revert to the marginal cost. (Click here to see video)
Peter Beutel of Cameron Hanover was on CNBC a few moments ago and guessed oil would trade in a range of $68-$80 soon. Such directional estimates looked absurd recently as oil defied gravity and soared ever higher. Goldman Sachs recently forecast that oil would still see $149 this year. Anything can happen but the trend in oil, and most commodities, is clearly down in my view.
The recent strength in the dollar is probably caused as much by weakness in the Eurozone as anything else, but it is still strong. Since oil is priced in dollars, a stronger dollar can allow producers of oil to take a lower nominal price and not feel forced to cut production. OPEC meets again soon and with the threat of a resurgent Russia causing great concern in that section of the world, it probably is politically unfeasible for them to consider a production cut. Since they are overproducing the announced quota right now, chances are they will simply revert to quota and otherwise take a low profile. But the market knows this as well and the price of oil still can't move up.
It's 11 AM on Labor Day and it looks like the worst fears surrounding Hurrricane Gustav will not be met. Keeping in mind that it was round 2 of Katrina that caused the disaster, it does appear that Gustav is no danger to the oil/gas/refinery complex in the Gulf Coast.