I totally disagree that $41 a barrel is very encouraging for the Gulf states, the majority of whom depend so heavily on oil revenues. The fact is US crude has been hovering around the $40 a barrel mark since the end of January, and was above this level for 2 weeks beforehand. $41 a barrel will certainly not discourage OPEC to cut production when they next meet.

Ok, its not as low as it has been ($35) but this is still way short of what the Middle East and OPEC members would like to see because budgets have been allocated on the basis of it being significantly higher. Around $70-$75 seems to be the threshold that producers and consumers would be happy with. As it stands, $40 is too low for OPEC so expect another slash in production.

In future years, we'll be looking back a $40 a barrel oil with wistful nostalgia. Even the biggest oil boosters now agree that supplies are going to run out eventually. Before that happens we're going to see prices rise as the remaining oil gets harder to find and more expensive to produce. Expect $100-$150+ to be the norm before the end of our lifetimes.

I think most Gulf countries have budgeted for oil at a break-even price of around $52-57, so there's still some way to go before they'll be happy with prices. Even so, it's interesting to see that many of them have announced record public spending levels for 2009 – obviously Middle Eastern coffers haven't been too hard hit by the falling price!