Funny how the talk of $100 crude has suddenly been joined by the crowd arguing that $90 is more feasible than $100. The first hint of this talk came yesterday when I saw a headline on CNBC asking which would come first. An early drop in the price of black gold has certainly given more momentum to the bears in today's early trading. This drop was prompted by news coming from the International Energy Agency (IEA), which cut its estimate of global oil demand for 2007 and 2008 (by 500,000 barrels per day) thanks to record-high crude prices. The last time I checked, the front-month crude contract was trading more than $2 lower, establishing a foothold in the 92 region. Perhaps the most significant development thanks to this drop is that the commodity has lost the support of its 10-day moving average, a trendline that it has not closed below in more than a month.
Today's bearish news morsel has been enough to overshadow bullish comments from Saudi oil minister Ali Naimi in today's edition of the Financial Times. In the interview, Naimi notes that OPEC ministers are not going to meet to discuss supply and prices and the heads of states definitely are not going to discuss it. Naimi did say that he was concerned about the global economy, but dismissed concerns about the adequacy of energy supplies, stating, there are very pessimistic views, that we do not share, about supply, adequacy of supply and there are also pessimists who keep saying that we are going to run out of fossil fuels, especially oil. The oil minister noted, these pessimists about the adequacy of supply and adequacy of reserves in the future, I think they are doing a lot of damage to the stability on the market.