I think we can discuss at length on how theoritically arbitrage with the physical would bring prices in line if speculators were really running up prices to excessive levels. Obviously even people in the futures trading business don't come in agreement on this issue (see Santelli vs Bouroudjian debating) although the majority support the view that exonerates them. It's possible that arbitrage does not work as well in practice I don't know but the the fact of the matter is you have a whole new class of natural buyers coming in (long only funds) it must inevitably drive prices higher, it's just like stocks. Stocks go parabolic purely on momentum and herd behaviors and once it goes parabolic fundamentals take a back seat to the point that prices are moving for reasons that have absolutely nothing to do with fundamentals and wealth is transfered to the insiders (in this case the oil sector companies) with no basis and merit whatsoever for that transfer. Its' a Ponzi scheme .
There is nothing theoretical about my point, and I did not mean to say arb would make the prices fair. I am not even arguing that prices are fair, I am just saying there is something missing from your story. It is fact that a long who doesn't want oil has to sell to roll, and by a deadline. In your story longs are drawn in by a trend, and somehow their selling to roll doesn't affect prices. So who are they selling to when they roll? You haven't explained how the ponzi scheme can last past the front month contract expiration. I think your comparison with stocks doesn't work because stocks don't have an expiration date. A futures contract is more like a stock that pays a liquidating dividend at a set date.