Too good to last, unfortunately

The Associated Press has the story by Pablo Gorondi:

Oil prices rose more than four percent Thursday, to above $45 a barrel, as investors looked past an energy watchdog's warnings that global demand is sliding sharply and focused on expectations of a big OPEC production cut next week. A weaker dollar and news that the US Congress was one step closer to approving $14 billion in loans to Detroit's automakers also helped boost prices.
By midday in Europe, light, sweet crude for January delivery was up $1.98 to $45.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 3.4 percent, or $1.45, overnight to settle at $43.52. In London, January Brent crude rose $2.47 to $44.87 on the ICE Futures exchange.
A report by the Paris-based International Energy Agency saying that global oil demand will shrink this year for the first time since 1983 was not considered to be critical for oil trading as long as the OPEC meeting loomed. "It is difficult to trade the IEA supply and demand without knowing the amount that OPEC will supply," said analyst Olivier Jakob of Petromatrix in Switzerland. The IEA cut its forecast for global oil demand in 2008 by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 percent from 2007. The IEA also cut its forecast for global oil demand in 2009, saying it would increase by just 0.5 percent next year, to 86.3 million barrels a day. That was 200,000 barrels a day less than its estimate last month.
"The market is trading sideways right now. It's the year-end and many traders don't want to take risks. Sentiment is still bearish. A lot will depend on the OPEC meeting next week," said Clarence Chu, trader at Hudson Capital Energy in Singapore. The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global crude supply, has signaled it plans to reduce output quotas at a meeting Dec. 17 in Algeria. Many analysts expect production cuts of as much as 2 million barrels a day, which would match the combined reductions of two previous output cuts earlier this year.
Victor Shum, energy analyst at consultancy Purvin & Gertz in Singapore, said indications from Saudi Arabia — the biggest oil producer in OPEC — that it would cut production going into January boosted hopes of a significant output reduction by OPEC of more than 2 million barrels a day. Russia's plan to coordinate production levels with other non-OPEC producers also supported prices, he said. Energy Minister Sergey Shmatko said Russia would soon make an announcement of its intentions with OPEC. Shum said OPEC production cuts, which had failed in the past to curb plummeting oil prices, would not result in a rally but would stabilize the market and prevent any further downward spiral. "There is a lot of bad economic news and if there is no meaningful cut by OPEC, oil pricing will come under a lot of downward pressure," he said.
The success of any output cut in stabilizing the oil price will depend on how closely OPEC members comply with it, he said.
OPEC's November production was well above quotas agreed to by members earlier this year that were intended to take 2 million barrels of oil off the market each day. OPEC's 13 members pumped an average of 31.38 million barrels a day last month, a decline of only 880,000 barrels from the October level.
Oil prices have fallen 70 percent since peaking at $147.27 in July. After hitting $40.50 a barrel last week, some oil traders believe that if the market has not bottomed out, it is close to doing so. "While we maintain our bearish bias, we are of the opinion the market has found a range in between the low $40s on the bottom and the mid $50s on the high end," said The Schork Report edited by oil trader and analyst Stephen Schork.
The U.S. dollar lost ground against other major currencies, making commodities like oil more attractive to investors as a hedge against inflation and dollar weakness. The euro rose to $1.3168 on Thursday from $1.2988 late Wednesday in New York, while the dollar fell to 92.24 Japanese yen from 92.63 yen in the previous session.

Rico says he doesn't drive, but he does help buy gas, so he's just as happy to see it falling...