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Trust Goldman Sachs on Oil Prices

NEW YORK ( TheStreet) -- Trust is not a word normally associated with Goldman Sachs, particularly in the post-Greg Smith era.

But the firm may be a better read on the direction of the crude oil trade than President Obama and Saudi Arabia combined; not that Obama and the Saudis aren't throwing all their weight behind an effort to talk the market down from "panic" high oil prices.

Obama will appear with the backdrop of the Cushing, Okla. oil hub behind him on Thursday as he tries to take control of the pain-at-the-pump issue in an election year.

This oil photo-op comes after the hints dropped last week by British politicians that the U.K. and U.S. were preparing to tap strategic petroleum stockpiles, which did little to keep a lid on crude oil prices for more than a minute.

The Saudis said on Tuesday that they stand ready to make up for any real or perceived oil shortages, and the fear in the market about a frothy oil trade lasted as long as a good night's sleep.

"Yesterday's über bearish comments out of Saudi Arabia have been somewhat discarded for now, with its impact negatively correlated with the amount of sleep we have had since the news," wrote Summit Energy analyst Matt Smith.

Crude oil was back up on Wednesday, as the demand drawdown in crude released in the latest numbers made quick work of the bearishness. Even as distillate demand and gasoline demand were weak, the crude oil demand drawdown was enough to send oil back up. Reports that the southern extension of the controversial Keystone XL pipeline from Cushing to the Gulf Coast, otherwise known as the Cushing Pipeline, is moving full speed ahead in construction ahead of Obama's visit buoyed the WTI crude trade more than Brent.

Late in the day, the White House made official its plans to announce at Cushing that the Cushing Pipeline will be fast tracked for permitting and approvals as a top priority in a new broad push by the federal government to speed the approval of all pipeline projects as part of U.S. energy policy.

Yet the fact that the Saudis released a barrage of information on Tuesday to combat the idea that current prices were justified for crude oil, ultimately to little effect, shows just how difficult it is to make a bearish case for crude barring a major global slowdown.

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