In a not-too-distant past, the mere suggestion that oil might one day hit $100 a barrel would have earned you the epithet of “doom-monger”.

Now that we’ve all gotten used to the idea of stratospheric oil prices as the global economy’s Public Enemy Number One, the prospect of $100 oil is suddenly being hailed as a saving grace.

If you've been to the pump lately, you may have gotten a pleasant surprise. Oil prices are coming back down to Earth from their recent record highs as demand slackens in a slowing global economy. Not even petrol-thirsty China is enough to counter this downward trend.

The dramatic declines that we’ve seen on oil markets are yet to be mirrored as dramatically in prices at the pump.

But what’s clear is that oil’s gravity-defying act is losing momentum as commodities do an about-face after months of upward progression.

U.S. benchmark crude – the standard-bearer for oil pricing - closed Tuesday's session in New York below $110 a barrel.

It's now almost $40 down from its skyscraping peak above $147 on July 11. At one point on Tuesday, it had dipped to a five-month low around $105.

This is obviously a rare glimmer of “good” economic news for consumers – and entire economies – ravaged by high fuel and food inflation. Cheaper oil is also giving a boost to sectors such as automakers and airlines, for some of whom dearer oil has been a life-threatening scourge.

But we need to inject a note of caution as well. None of the current trends would seem to portend a return to cheap oil, by which I mean oil in the range of $30 to $50 a barrel that used to be the norm.

What's clear is that we are seeing a role-swap at work in global markets. The long-embattled dollar is on the rebound as shrinking economies in the euro zone, the UK and Japan drag the euro down.

Commodities had benefitted from the dollar’s travails, acting as a hedge against dollar-driven inflation. (Oil is priced in dollars, so any decline in the US greenback tends to send oil higher.) 

The immediate impetus behind oil’s swoon was Hurricane Gustav. It huffed and puffed, but in the end its gale-force fury wasn’t enough to knock out the oil rigs in the Gulf of Mexico that supply a quarter of US oil production. That had been a big fear among many oil traders and companies.

But even without Gustav, the global economy was exerting a downward pull on oil.

Before, everyone thought the problem was one of supplies failing to keep pace with demand. Supplies will remain a key issue in the medium and long-term. But the focus of concern has shifted to demand. The International Energy Agency has forecast a 1.3% drop in demand this year in the world’s leading developed countries. As France’s Le Figaro daily notes, the outlook is “nuanced” in so far as some countries outside the Organization for Economic Cooperation and Development will see a rise in demand.

Meanwhile, supply worries have eased a bit with events such as Brazil’s tapping of new oil in deep waters off its southeast coast. The US has also released 250,000 barrels from its strategic reserves in the wake of Hurricane Gustav.

As for the world oil cartel, OPEC, it’s facing a tug-of-war among its members at next week’s meeting in Vienna.

Iran and Venzuela want to see a cut in output, arguing that the market has a glut of oil supplies. But Saudi Arabia, the world’s leading producer, is still the one that calls the shots, and it's actually been adding oil supply to the market in recent months. So it will likely apply subtle counter-pressure to resist any drastic moves.

In the meantime, it’s probably safe to bet that in the long term, oil’s natural home will be closer to the stratosphere than the cellar.