The OPEC boys still seem to have their work cut out. Gasoline prices were getting hammered on hopes that a strike could be averted and oil dipped below $40 a barrel. From OPEC's point of view, it was like Nightmare on Elm Street: the cheap oil years.

If you are a cartel member you probably have to ask what more can we do to support prices? OPEC got some help because the ISM manufacturing number showed that US manufacturing was only dismal as opposed to disastrous but what really saved the day for the cartel was their own better than expected discipline.

Oil got good bounce on a Bloomberg report that showed production from the OPEC boys club was down 1,050,000 barrels a day from just a month ago. Not only that OPEC's Sectary General warned that the cartel would not hesitate to cut production further if the prices did not respond to their actions.

Yet does OPEC matter? Oil demand is falling despite the fact that they keep cutting production. Demand continues to fall as spare production capacity continues to rise. Reuter's News reported that according to the Department of Energy demand for oil in November hit the lowest level in 10 years. U.S. oil demand in November was 305,000 barrels per day less than previously estimated and was down 1.577 million bpd from a year earlier to the lowest November level since 1998.

With weak demand and excess spare capacity, the ongoing problems in places like Nigeria doesn't move the market like it did before. On Jan 30th the Movement for the Emancipation of the Niger Delta said it was calling off a four month cease fire. That means more attacks are likely and could keep Brent crude trading at a premium.

Yet at the end of the day it is still the economy that will drive oil. We are putting on futures and option combos as well as trading the ranges. The charts have played the formations well. Call me for the number at 800-935-6487 or email me at to open your account.

We're short March crude oil from apprx 4354 on what is now a quadruple rollover! Lower stop to 5170!

Sell March heating oil at 15100 - stop 15600.

Sell March RBOB at 12900 - stop 13300.

Sell March natural gas at 500 - stop 520.