(Crude oil prices story updated for Thursday energy sector trading and earnings)

NEW YORK ( TheStreet) -- So much for Goldman Sachs bearish calls on commodities. So much for Standard & Poor's slaps on the wrist of the U.S. government for its fiscal management being a harbinger of economic doom. Goldman can tell investors to take commodities profits because speculation has gotten ahead of fundamentals and S&P can cut the U.S. government's credit card in two -- which helps crude oil in the sense that a weaker dollar benefits commodities -- and in the end oil prices keep moving to the upside.

On Thursday, crude oil prices remain near a key technical level from which they last fell after the Goldman Sachs bearish call on commodities.

The price of U.S. crude oil gained $3.17 on Wednesday to settle at $111.45 and on Thursday was more or less flat on a light trading day before the Friday market holiday, ticking up by as much as 0.6% in recent trading. Crude oil surpassed $112 in early trading and was higher than the Wednesday settle in midday trading, at $111.77. Brent crude was close to flat on Thursday as well, near the $124 mark.

On the Monday before Goldman's "sell commodities" call took down crude oil prices on April 12, crude oil had been above $113. Crude oil fell under $106, and all the usual arguments were in play, from demand destruction on the horizon to inventory levels that couldn't justify the high oil prices, yet for energy traders and investors, nothing has changed.

The latest inventory data from the U.S. released on Wednesday once again pushed out the argument about demand destruction, and the fundamental drivers of upside in the oil trade -- a weak dollar, a risk premium in the Middle East and speculation -- remain in place.

"The market totally shook off the Goldman sell signal, and we are seeing it across the board in commodities, with silver cranking to new highs, too. Nothing has changed," said Phillip Silverman of commodities trading firm Kingsview Capital. Silver reached another 31-year high on Thursday and gold remained in the headlines after touching above $1,500 for the first time on Wednesday and moved slightly higher on Thursday.

Oil had gained steadily through the first three days of the week as the dollar declined, U.S. bellwether earnings exceed expectations, the Middle East and Libya remained in flux, and the Wednesday gasoline draw down data was greater than anticipated by the market.

Energy traders said after the Goldman call that there is still upside in the oil trade, yet with the recent back-and-forth action, it's been about picking spots. "People are quick to sell when it gets nervous, but once those guys are gone the market marches right back in. There is plenty of support out there for high oil prices because it's financially driven. We're still at record inventory levels at Cushing. Buy on pullbacks and sell on spikes," Silverman said.

Greg Priddy, an analyst at Eurasia Group, which advises financial firms on energy and political policy, said the risk premium in crude is not something OPEC could do anything about short of flooding the market, and OPEC made clear this week that it has no intention of doing that, and in fact, the economics don't make sense right now for more Saudi crude. The Eurasia Group analyst says that the "Libya + 1" scenario -- referencing the next Mideast nation to fall -- wouldn't change the upside in the oil trade even if OPEC made up for the Libyan market disruption. "The generalized fear of political tumult in the Middle East will continue to play out. Whether it's another $10, $20 or $30, oil prices will be volatile, but upside remains in the short-term headlines."

John McClane, president of commodities trading advisor Mobius Asset Management, said the Goldman Sachs call was never an issue he factored into trading, nor does he pay any attention to the oil price targets issued by Wall Street firms whether it's to the bearish or bullish side, calling the game-playing with oil prices a "disservice" to investors.

"Goldman can say crude will average $105 and Bank of America can say $160 and I could say $260, but for me you remove the noise and take what's in front of you and deal with it. It's extremely hard not to take a long-term bullish view of the oil market," McClane said.

Not missing a "disservice" beat, Bank of America/Merrill Lynch predicted on Wednesday that Brent crude will rise to $140 in the next three months.

McClane noted that he started getting a little fearful when crude oil first reached $108 during the first week in April. He actually sold before crude oil continued up to $113, but then got back in when oil hit $106. "I didn't develop programs to be this quick, but yet now you need to recognize when to be in and when to be out."

Ultimately, the commodities trader said investors need to expand their thinking about how much crude oil can move on any given day. "We continue to move up the ladder in volatility, and assumptions about $1 moves in crude oil on any given day are now $4 bucks per day."

Technical traders will again be eying the resistance in the crude oil trade, with the $3 rally on Wednesday above the $111 level.

During the week of Sept, 26, 2008, U.S. crude oil hit $110.31, and that was the "last gasp" rally for crude oil before it tanked and the largest peak-to-valley trough in the oil market ensued. After the summer 2008 high crude price of $140, crude tanked and it was only in late September 2008 that crude oil rallied before heading even lower.

Kingsview Capital's Silverman noted in thinking of the oil trade from the technical perspective that in the period leading up to the Goldman sell call on commodities, crude surpassed the $111 mark and went as high as $113. "Technical traders are looking a lot at that and the recent low of $105 to see if there is any reaction above or below, yet it looks today like there is heavy buying that wants to test that high and not much has changed in my thinking since the Goldman call."

Energy stocks were up in line with the S&P 500 on Thursday, with a gain of 0.5%, after a big rally on Wednesday when the sector was up by more than 2%.

For the second straight day, it was the European-based integrated oil companies that set the pace, with Repsol ( REP), Royal Dutch Shell ( RDS.A) and Total ( TOT) up by 1% and outpacing the U.S. integrated oil and gas companies, except in the case of ConocoPhillips ( COP).

ExxonMobil ( XOM), and Chevron ( CVX) were up marginally on Thursday at midday.

Trading was mixed among the major U.S. independent energy companies, and only Range Resources ( RRC) was up by more than 1%.

The recent indication from the U.S. land drilling market have been bullish, as well. Last Friday, Chesapeake Energy ( CHK) announced a deal to buy Bronco Drilling ( BRNC) that reinforced the pace of drilling in the U.S. and the need for more rigs now, a contrary indicator set against all of the "fear mongering" about the U.S. drilling market being at a peak, said Alan Laws, analyst at BMO Capital Markets. Halliburton ( HAL) commentary during its earnings call on Monday reiterated its belief that the North American market remains strong.

In the oil service sector, Thursday's gains were about the outlook for the international market and commentary from oil service giant Schlumberger ( SLB). Schlumberger was the big gainer on Thursday, up 1.7% after its management commentary that the international market activity may rebound more strongly than expected -- though this was the same bullish commentary that Schlumberger provided at an industry conference a few weeks ago.

Weatherford International ( WFT) was on the other end of the tape from Schlumberger, sliding on Thursday -- though it had narrowed a 3% loss to 1% in the afternoon -- after its earnings came in short of Wall Street expectations, and its guidance for the coming quarter was below consensus. Weatherford shares have lagged peers since it revealed in early March that it would have to restate earnings based on tax rate errors. Between bad weather and Middle East business disruptions, on top of the tax issues, Weatherford results came in even worse than Wall Street's diminished expectations and lagged peers.

After the market close on Wednesday, on the one-year anniversary of the oil spill, BP ( BP) revealed that it had filed lawsuits against Cameron International ( CAM), the maker of the blowout preventer, rig operator Transocean ( RIG) and deepwater engineer Halliburton.

BP sued Transocean for $40 billion -- BP has so far written off $41 billion in oil spill charges -- citing failures in every single aspect of Transocean's Deepwater Horizon rig systems and devices. At the same time, Transocean filed suit against BP.

BP is suing Cameron International for faulty design in the blowout preventer, which echoes the comments from the government report on the device.

BP has previously stated in its interim oil spill report that Halliburton's "bad cement job" was to blame, and now is suing Halliburton for fraud, negligence and concealing material facts in connection with its work on the rig.

One important legal fact in the BP suits filed on the one-year anniversary of the oil spill is that BP's right to sue would have expired if it did not file within a year of the disaster.

Cameron and Transocean shares were off the energy pace on Thursday, with both down a little less than 1%.

A trio of earnings reports released in the past 24 hours from oil drillers led to mixed trading, with Diamond Offshore ( DO) and Ensco ( ESV) rising by 2.5%, while Noble ( NE) declined by 1.5%.

All the drillers reports lower year over year profits, with Ensco profit declining by 66% and Noble profit down 85%. Lower rig rates and the Gulf of Mexico drilling delays contributed to the weaker performance from the drilling companies. Diamond Offshore profit was down 14% year over year and it too cited the weaker pricing for rigs.

-- Written by Eric Rosenbaum from New York.

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