Oil straddled the $80 mark on Wednesday, pressured by further worries about China implementing price controls on oil and other commodities to curb inflation as well as concerns over Ireland's debt problems.
The belief that China is the engine that will drive future energy demand into 2011 has been articulated by major energy agencies and Wall Street firms alike.
While the expectation and immediate aftermath of the Fed's latest monetary easing may have pushed oil prices to their 2010 high of $88 a barrel last week, it is China that has fueled much of the speculative fervor in the commodities market this year.
Now, however, oil prices are basically smack in the middle of the $70-$90 trading range that had dominated the market for months. Year-to-date, oil is up 1 percent.
A huge, 7-million barrel decline in weekly oil supplies barely lifted this market, but weekly demand is still dismal and overall US petroleum supplies are well above the five-year-average. In fact, there is half a year's worth of crude sitting in US supplies at this point.
The U.S. is still the largest consumer of crude oil and supply is plentiful here. A note from HSBC points out that California currently consumes more crude oil than China. So if U.S. supplies are plentiful and demand may be slowing in China, oil prices may be hard pressed to remain much above $80.
Elsewhere in energy, winter is coming and the natural gas market is finally figuring that out.
Natural gas futures gain 5 percent Wednesday on forecasts that it's going to be pretty cold across much of the country from Thanksgiving through early December.
But let's put this in perspective. While natural gas is over $4 right now, futures have been fluctuating 25 cents around the $4-mark so far this month. So right now, prices are just right in the middle of the recent range.