Ok, I know it was just two weeks ago when I wrote $100 or go bust and last Friday when I wrote $90 or go bust but now I am saying that crude could be ending its epic slide. That is as long as $85 holds. You see in was just three weeks ago when oil was solidly above $100 a barrel. Many felt that $100 a barrel would hold yet as I wrote on May 4th that The bullish oil price scenarios are giving way to what seems to be ever mounting supply..... so we have growing odds of a continuing price collapse. And when 1oo fell I wrote Ok, I know it was just last Friday when I wrote $100 or Go Bust but because so many oil bulls expressed disbelief that oil could actually stay below $100 a barrel I should warn those people that they should stop worrying about the break below $100 a barrel and start worrying about whether $90 a barrel can hold. The West Texas Intermediate Oil contract is giving way to a host of global economic worries and the weight of ever mounting supply. Yes, I know last week I wrote the bullish oil price scenarios are giving way to what seems to be ever mounting supply and that lowered demand expectations and so we have growing odds of a continuing price collapse but when you are right you are right. While oil seemed to hold $95 a barrel yesterday the fundamental outlook continues to look heavier and perhaps even heavier than it did just one week ago.

Of Course $90 did fall because not only did we see US oil supply hit the highest level since 1990 (Again) we heard from OPEC and the International Energy Agency that oil production is far exceeding demand. According to the IEA OPEC is producing 31.44 million barrels a day led by Saudi Arabia which is pumping out the most oil in about 30 years.

I spoke about the impending drop say what we were seeing was a major unwinding of the Iranian War premium. Not only is the risk of war less likely the market has already replaced Iran's supply. Increased US and OPEC production as well as Global Strategic Reserves filled to the brim the risk posed by the loss of Iranian oil has been negated. Add to that the UAE's strategic oil pipeline for bypassing the Strait of Hormuz is complete and we are going to see the reversal of the Seaway Pipeline to get oil out of Cushing Oklahoma to the rest of the world is another factor that will pressure price.

Yet now that 90 has fallen it is very possible that this run to the downside should slow. Technical a test of just below $90 was in the technical cards it is very like that oil has hit its value zone. With Iran talks being kicked again down the road until June in Moscow and refiner getting to ramp up with better margins we should find comfort in a pane from 89 to 95ish.

Yet what could send crude tanking is a surprise pullout of Greece out of the Euro Zone. That would more than likely take us below $85 and open the door for a potential $30 drop. Yet that is unlikely as the markets have already sent a message to all the leaders in Europe that a messy exit by Greece would lead the global markets into another deflationary death spiral. So whether Greece leaves the EU or not the bottom line is that all realize that they had better be ready with the printing presses. In fact the fear of what may happen maybe softening some deeply held political positions.

Bloomberg News reports Chancellor Angela Merkel left the door open to a compromise on debt sharing in the euro area as Italian Prime Minister Mario Monti said he can help bring Germany round to acting in Europe's common good. Merkel's veto on allowing Germany to underwrite joint debt issuance in the 17-nation euro region is under fire from her international partners as well as the domestic opposition. While she refused to back joint euro-area bonds at a Brussels summit on May 23, Germany's opposition parties wrung a concession from the chancellor on her return to Berlin yesterday to reconsider a separate proposal on common liability for sovereign debt. The blueprint, published in November by Merkel's council of economic advisers, involves a so-called European redemption fund that would help governments scale back outstanding debt to below 60 percent of economic output in return for constitutional commitments on economic reform.

As far as Iran goes talk is good but AP is reporting Diplomats say the U.N. nuclear agency has found traces of uranium at Iran's underground atomic site enriched to higher than previous levels and closer to what is needed for nuclear weapons. The diplomats say the finding by the International Atomic Energy Agency does not necessarily mean that Iran is secretly raising its enrichment threshold. They say the traces could be left during startup of enriching centrifuges until the desired level is reached. That would be a technical glitch only. But they say the agency is investigating the find because the higher the level of enrichment, the easier it is to turn uranium into nuclear warhead material. The diplomats demanded anonymity from The Associated Press because their information is confidential. They all follow the IAEA's monitoring of Iran's nuclear program. Stay Tuned to another reason why oil may be near a bottom.

Stay tuned to The Fox Business Network where you get the Power to Prosper! Also say a prayer this weekend for those that gave all! God Bless them!

Phil Flynn
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