When bullish is not just bullish enough.

Oil looked a bit tired to start the week, unable to build on early gains inspired by a weekend of what should have been exceptionally bullish news. Whether it was the strong economic data out of China or the increasing tensions around the globe with regards to Nigeria and Iran, or the ongoing oil price dispute between Russia and Belarus, the bulls should have continued to have their way with this market the way they had the week before. Of course when a market fails to rally on bullish news it means more than likely the bulk of the news was priced in or in this case perhaps overpriced in. Traders anticipated that the nasty cold had played a big part in pumping up the price of oil. This weekend was the weekend that was supposed to be the beginning of the new ice age, so some traders might have been shocked that temperatures could actually go up. Or maybe they are just be reminded that despite the cold and the strong demand out of China the globe still has ample supply.

As for the Russia and Belarus situation, Dow Jones reports that Russian oil supplies are continuing to and via Belarus to Europe despite the two countries' failure to sign an agreement for 2010, Belarus' state energy firm, Belneftekhim, said Monday, according to the RIA Novosti news agency.  The market is also raising questions about the data out of China and in a sense it was priced in as oil went on that relentless rally. The bottom line is that the market action was not what the bulls had hoped for.

Peak Freaks worried about peak oil, as opposed to peak demand, may find one more reason to rest at least a little easier. For the first time in seven years production at Pemex Oil in Mexico may actually rise. Bloomberg News reports that Petroleos Mexicanos, the state-owned oil company, may produce more crude in 2011 as new discoveries come on line, arresting seven years of plunging output. The company says it may produce 2.55 million barrels a day next year, up 50,000 barrels from 2009. What is more, the company plans to increase output to near 2.69 million barrels a day in 2010. Bloomberg says that Pemex pumped 2.602 million barrels a day through November 2009. Pemex output entered its seventh year of declines this month, as the company aims to find new deposits and bring discoveries online to replace aging fields. Pemex Chief Executive Officer Juan Jose Suarez Coppel has said the company may pump 2.5 million barrels of oil a day in 2010. The company expects to add production from new fields that are part of its Crudo Ligero Marino project as well as fields in the Campeche sound, the location of Cantarell, the world’s third-largest field when it was discovered in the 1970s. Production at the $11.1 million Chicontepec onshore field and additional onshore projects may also climb next year. Cantarell accounted for about two-thirds of the oil Mexico produced at the peak of production in December 2003, fell by 35 percent in November from the year-earlier period. The production declines cost Pemex about 300 billion pesos ($23.4 billion) in lost sales last year. This forced Mexico’s government, which relies on oil revenue to fund about a third of its budget, to raise taxes to narrow the widest budget deficit in bout 20 years.

London-based BP Plc may surpass Pemex this year to become the third-largest producer of crude oil in the world, based on data compiled by Bloomberg. Pemex and BP rank third and fourth in world crude oil production, respectively, the data shows. Saudi Aramco is the world’s largest oil producer followed by the National Iranian Oil Co.  Pemex’s natural-gas production may fall to 6.1 billion cubic feet a day in 2011 and 6.25 billion cubic feet in 2012, Morales said in the presentation. Pemex extracted 7.045 billion cubic feet of gas through November.

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