I'm curious as to how many of my readers popped the champagne cork when oil broke over $100 a barrel. How many of you scoffed when oil prices reached the benchmark, believing it was only a fluke and that prices would soon return to normal?

Now, how many of you had my reaction: A simple shrug, asking "$100 oil? So what? We were telling people this over a year ago."

But believe me, dear reader, $100 oil was a psychological benchmark for a reason. Cars were still driven. The world kept turning. There was no apocalyptic nightmare.

It was only a matter of time before the skeptics came forward to offer their two cents. In fact, I spent most of the day yesterday in a heated argument with several of them. What can I say? If you were in my shoes, you would have done the same. (Judging from the passion some of my readers have about the oil markets, a few of you might have gone overboard.)

I'll admit the first couple of calls were pretty bland. After several minutes, they tucked in their tails and hung up (some more rudely than others). It wasn't until one pompous gentleman called me up that things really got contentious.

"$100 oil is a fluke. Some rogue trader wanted to make a name for himself and bought some overpriced oil," he began. I'll spare you the expletives this guy used. Let's just say there were more four-letter words than I'm used to. I silently allowed him to continue. "Once traders realize that $100 oil is bogus, it's going to drop. And it's people like you that are allowing this nonsense to happen."

People like me?

That was the proverbial straw that broke the camel's back. It wasn't just a jab at me . . .

He was insulting you.

That, unfortunately, was what set me off for the rest of the day. Perhaps my answer wasn't what he was expecting.

I laughed.

"Can you even remember the last time U.S. inventories rose? It's been practically two months, and we've been getting the same report over and over: Inventories dropped . . . again. OK, you can even forget the weekly declines, how many times have you heard a positive outlook for those weekly petroleum reports by the EIA (Energy Information Agency)?"

"You just watch," he started, "prices will plummet tomorrow and for the rest of the month."

Needless to say, the hour-long conversation ended up with neither one of us yielding. He was steadfast in believing it was all a fluke.

When the EIA reported another drop in crude oil stocks, I had a feeling the guy wasn't up to another round. He has yet to answer his phone today.

You see, there was another decline, this time by four million barrels. The news was enough to push oil prices back over the top, reaching up to $100.09 before retreating again.

My readers are well aware of my bullish outlook for oil prices this year, and I've repeatedly said that 2008 will test the theory of peak oil. The most influential factor in oil prices has always been demand outstripping supply. Until we see some serious relief hitting the markets, prices will continue to escalate.

The mighty OPEC has already said they can't hold back this rally. Unfortunately, until we have accurate data on their oil fields, we'll never know whether or not they even can help. The question might be: How long can they keep up the charade?

Until next time,

Keith Kohl

www.energyandcapital.com