Where Will Oil Go Next?

 A weekly chart of oil shows crude in the process of making a breakout, and it could be big.

On Monday, oil surpassed the all-time record of $103.76 a barrel when adjusted for inflation. The previous record was $38, set in 1980 at the height of the U.S.-Iran hostage crisis.

Oil prices could top $300 per barrel within the next five years, according to one industry expert. Former White House energy advisor Matthew Simmons said the current highs of $100 per barrel are “cheap”.

In the UK’s capital, London, where typically the price per gallon can reach as much as $9, it hasn’t deterred motorists from continuing to use their cars.

Some of the forces driving oil higher …

• The US dollar is tanking. The greenback sank to a record low on Monday as the US economy slows and the Federal Reserve keeps lowering interest rates. Since oil is priced in dollars, as the dollar slides, oil generally climbs. They’re on either end of what I call the “seesaw of pain.”
•  In 2008, the world will hit an important milestone — using oil at a rate of more than 1,000 barrels PER SECOND! According to the International Energy Agency, global oil demand will average 87.8 million barrels per day (bpd) in 2008, up from 85.7 million bpd in 2007. At 87.8 million bpd, we’ll use 1,016 barrels per second — a sonic boom of energy use.
• America is the world’s largest consumer of oil, guzzling more than 7.5 billion barrels per year. We import more than half the oil we use, and that amount is rising.
• The world consumes an astonishing 173 billion barrels of oil every 2.4 years. At the same time, we find enough new oil to supply just 3% of that. So, just to keep prices stable over the next decade, we’re going to have to find a couple more fields the size of Ghawar — the biggest oil field in Saudi Arabia … and the world.

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