With NYMEX oil floating in the high US$50s and low US$60s right before the election day, forecasts range from “going down more” to “going way up after,” but no one seems to really know what is going on there. On the G.U.N. gold versus barrel of goods chart from today, we can see how far NYMEX fell versus all the commodities in just the past 60 days. If you watch the graph, you’ll see that NYMEX crude oil stuck with the barrel of goods average fairly well from the start of the chart, May 9, 2006, until September 6, 2006. At that point (about 60 days ago), it really fell sharply.

OPEC President Edmund Daukoru said on Sunday that “all the group’s members will fully implement their production cuts, while market conditions may force the Organization of the Petroleum Exporting Countries to cut output further next month.”¹. A reduction in OPEN output would realistically push prices up (lower supply, higher price) unless there is either a cut in demand (unlikely) or an equal rise in supply from other resources.

With the recent drop in Natural Gas prices, some drillers and miners in the Texas shale region are cutting output. “Chesapeake says it will shut in 6 percent of its production, or EnCana Oil & Gas of Canada says it will drop four of its Barnett Shale rigs.”², says an article at the DFW Star-Telegram. As NYMEX prices went up, experimental wells and other new energy sources in the US increased. Now as Natural Gas and Oil prices fall, more companies are considering pulling back in some regions, which is changing news from just a week ago.

In E85 news, Tennessee approved a $4 million budgetary increase to boost production of E85 fuels and other alternative fuels.³From a free market perspective, State-initiatives are usually more cronyism and paternalism than an actual response to demand.

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