Oil appears to building a base at $122.50

Oil futures are up a bit as of this posting -- nearly $3.00 a barrel. NOt sure it will hold, but we'll see.

There's an old adage: amateurs open the market and pros close it. We'll see if this the start of something or another dead cat bounce.

I'll let somebody else say it

From the AP via Yahoo:

More concerns that crude's run-up over the past year has pushed prices to unsustainable levels fed Tuesday's decline. The U.S. Transportation Department said Monday that U.S. drivers logged 9.6 billion fewer vehicle miles in May -- or 3.7 percent -- compared to the same period last year, the biggest drop ever for the historically busy summer driving month.

And demand for oil in the U.S. -- the world's thirstiest consumer -- continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department's Energy Information Administration said Monday.

"We're seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The declines accelerated after oil briefly dipped below $122, a key resistance level that triggered technical selling by computers programmed to dump oil contracts once prices fall under a certain threshold.

"Once we break through $120, we could easily slide through to $100," said Darin Newsom, senior analyst at DTN in Omaha.

Sound familiar? If we don't build a base at this level, there is nothing to stop oil from dropping to $100.

Michael Barone agrees with me

One of the reason I started blogging to begin with is that I sometime have the ability to see around corners and by blogging I could document my prescience. Last Friday, I made an observation that would clearly establish me as a True Master of the Obvious: $4 a gallon gas made a "tectonic shift" in public perception about energy in general and oil in specific.

Now, here comes no less than Michael Barone two days later saying essentially the same thing in The National Review Online. The Lede:

Sometimes public opinion doesn’t flow smoothly; it shifts sharply when a tipping point is reached. Case in point: gas prices. Three-dollar-per-gallon gas didn’t change anybody’s mind about energy issues. Four-dollar-per-gallon gas did. Evidently, the experience of paying more than $50 for a tankful gets people thinking we should stop worrying so much about global warming and the environmental dangers of oil wells on the outer continental shelf and in Alaska. Drill now! Nuke the caribou!

It's nice to be right.