BP oil drilling rig in Gulf of Mexico

The price of light crude for October delivery is trading electronically Thursday morning on the New York Mercantile Exchange (NYMEX) at $67.70 a barrel  and in London, Brent is trading at $66.46 a barrel.

The decline in the oil price - its lowest close since last March - partly stems from a Chevron Corp. led discovery, announced Tuesday, of a massive oil field beneath the deep waters of the Gulf of Mexico.

One analyst has remarked that you can tune out all the scare talk about Peak Oil for a while—probably a long while. Peak Oil is the theory, on the verge of becoming conventional wisdom, that the world's petroleum supply is topping out and will not be able to meet global demand soaring along with the economies of China and India.

There will be a new frenzy of drilling at deep depths in the Gulf of Mexico, where about a dozen promising exploration wells have already been drilled but such drilling is dependent on the price of oil remaining high!

The following  is this morning's Oil  Update from Paul J. Harris, Head of Energy & Emissions, Bank of Ireland Global Markets: 

Oil prices continued to trade at some $11/bbl below July highs yesterday but the bearish trend appears to have run out of steam for the moment. Brent currently sits at just over $67/bbl.

Threats to the security of supply in terms of hurricanes, Nigeria and the Middle East have reduced to an extent to remove the upward pressure that was characteristic of trading in July. The EIA numbers released this afternoon are expected to show a build of distillate stocks and, whilst crude stocks will show a drop, this will be in the context of higher year-on-year stock levels.

The markets will continue to range trade with a possible test of $65/bbl on the cards after this afternoons data. However, the Iranian nuclear dispute continues to cast its shadow over the market and this factor alone will rein in any aggressive bearish move for the time being.