Energy Prospectus

In the last 60 days the price of WTI has tested $78/bbl three times. Each time it has rebounded within a couple days, moving quickly back over $80/bbl.

Will it test it again? Your guess is as good as mine.

However, the old saying of "3rd time is the charm" usually holds for commodity prices. It looks like oil as rock solid support at $78/bbl. Keep in mind that we are talking about WTI. Global oil prices are above $100/bbl, including all of the oil that is getting to the Louisiana Gulf Coast market.

I think it is very important to remember that OPEC (actually just Saudi Arabia) can quickly firm up oil prices if they believe they are too low. Saudi is the only country with any excess capacity and most of it is heavy crude that few refiners want anyway.

It is obvious to me that Libyan crude oil will stay well below previous levels for several years at least.

Oil prices may have bottomed after falling to $76 per barrel recently.

The EIA's weekly oil report showed a 4.7 million barrel draw in U.S. crude oil inventories, putting us back within the five-year average range. Total U. S. consumption is still averaging slightly under 19 million barrels per day.

The good news is our imports of crude oil declined this week by more than a million barrels, while domestic production climbed to 5.8 million barrels per day.

The latter should make perfect sense: There are more rigs drilling into U.S. soil than in recent years.

And while we may never return to our glory days of oil production, it's certainly a start.