Oil prices slipped a bit on Monday; took a $3 a barrel leap upwards on Tuesday; and then slipped again on Wednesday to close at $91.25 in NY and $114.33 in London. As has been the case for many months, the down days were occasioned by faltering economic conditions with the upwards surges occasioned by fears of export disruptions. There is general agreement that the global demand for oil is slacking. On Wednesday, OPEC lowered its forecast for 2012 demand growth to 800,000 b/d putting it in line with the IEA’s estimate. This is also in line with a new report from the IMF which says the risk of a global recession is growing. In its report the IMF cut its forecast for China’s economic growth this year to 7.7 percent from May’s 8.8 percent estimate. In 2011 China’s GDP grew by 9.3 percent.

While the global economy continues to sag, tensions in the Middle East continue to rise with Turkey and Syria exchanging sporadic fire across the border; the rebels making progress in Syria; and Israeli Prime Minister Netanyahu calling a surprise election which some see as a preparation for an attacking Iran. The humanitarian problems stemming from the Syrian uprising are growing as refugees still flood across borders to escape government bombing of rebel held areas. Fears of a more general regional conflict continue to grow with Iraq now supplying oil to the Assad regime and the US sending 150 troops to Jordan to help with the refugee crisis.

Iran’s currency crisis seems to have subsided this week as the government began arresting unlicensed currency traders forcing people to exchange rials only at official exchanges. The move is allowing people to buy dollars at the rate of 25,500 to 1 as compared to the 37,500 to 1 that black market traders were charging last week; however, there are restrictions on the amount of currency that can be exchanged.

The weekly US stocks report is delayed to Thursday, this week, but analysts are expecting an increase in inventories as demand falls. The great California gas price spike sent retail prices to a record average of $4.66 for regular and $4.75 at some locations. The Governor ordered a switch to easier-to-produce and cheaper winter gas immediately instead of waiting for the end of the month and the Los Angeles refinery that triggered the recent spike due to a power outage came back into production. Most analysts believe prices will drift lower as the winter gas blends become available, although Chevron announced that its Richmond refinery will be out until the end of the year.

Venezuelan President Chavez’s victory in the Sunday election suggests that we will see an accelerated pace of nationalizations during the next six years unless his term is cut short by health problems. Chavez hinted during the election that he wants to make his “socialist revolution” irreversible by stepping up government takeovers. If the past 14 years are any guide, petroleum production should continue to slide.

The US Supreme Court refused to consider Chevron’s attempt to have the court block the $19 billion Ecuadorean environmental judgment against the company.