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Petroleo Brasileiro (NYSE: PBR), Exxon Mobile (NYSE: XOM), Chevron Corporation (NYSE: CVX) and other large oil companies have been quite volatile in recent weeks. Currency fluctuations and OPEC maneuvers have sent oil prices to nearly $50 a barrel despite no meaningful increase in demand. Analysts believe that this type of “artificial” price inflation is likely only temporary.

Crude oil demand in the fourth quarter, which has traditionally been very strong, is on pace to fall sharply this year. This will likely be followed by an even greater slowdown in the first quarter as it is typically weaker than the fourth quarter. Meanwhile, oil buyers have been buying larger quantities of oil than usual to lock in low prices – all oil tanks around the world are quite full.

Crude oil demand in the United States dropped 9.4% in October compared to the same month in 2007. Demand in China, another large consumer of oil, actually rose marginally, but a slowing economy may lead to declines in the future. With regards to the recent rise, one analyst called the jump “a bullish day in a bearish month” for crude oil.

The price of crude oil still remains a hotly debated topic in the financial world. Some believe that oil prices cannot remain this low as Saudi Arabia and other producers rely on higher prices to support social programs. As a result, these countries may cut their production until prices move higher. However, others believe that demand is so low that oil could dip further to as low as $10 to $20 a barrel.

Low prices would be bad news for companies like Petrobras that have relied on high oil prices to support its expensive offshore drilling projects. The firm has relied on $40/barrel oil in its estimates when evaluating how much money they would have to cover costs. Meanwhile, Exxon Mobile and Chevron will also see lower revenues as the selling price of their products is poised to drop.

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