Initially traders were very bullish because of a United States Energy Department report that said inventory was reduced by 4.6 million barrels last week. Analysts has been expecting a decline in numbers, but nothing like that. Oil Analyst Steven Shorck said in his Shorck Report:

“Net stocks of crude oil fell, hard, for a fourth straight week. That is the largest one-month draw since October 1990, when imports plunged in the build up to the first Gulf War.”

Many energy experts have been expecting the current oil crisis and insist that oil production is down because of fundamental supply problems.

The international community is pushing Asian nations to dump their subsidies to consumers, in order to quell the demand in OECD countries. Both India and Malaysia cut some subsidies, leaving consumers to pay higher prices for gasoline.

With energy being such a hot play these days, billions of dollars are being invested in Alternative Fuel Sources. One of the biggest deals of the week involved XTO Energy buying out Hunt Petroleum. What was the prize in that deal? Access to BILLIONS of gallons of natural gas in the Bakken Shale.

Energy remains hot in 2008. As the US Governments experiments with E85, Coal to Liquid, and Hydrogen as gas alternatives, investments in that category tend to outperform the market. Now is the time to educate yourself on the many alternatives that exist to gas, as well as gaining a deeper understanding of what is really happening when it comes to Oil Supply. The returns on your investments will be huge if you make the effort.

According to Olivier Jakob, the trend is likely to continue, regardless of fundamental reasons. “Monday and Tuesday crude oil managed to move ahead without the help of the dollar,” he said. “But once we broke above 1.59 euros per dollar and as we move toward 1.60, there’s going to be more buying coming into oil.”

Investors have been putting more money into commodities, and so far have found an above average return, especially as opposed to stock market investing. However, there are warning signs that the price increase in Oil might be slowing. Consumer demand appears to be sluggish, despite the U.S. heading into the driving season.