There isn't enough oil out there! What dummy is going to come out and say this is all due to speculators? Come on, Goldman put out a huge sell recommendation here and it went down $4 and went right back up $5! What a bullish market. We're going to hit $100 soon.
There is a lot of DEMAND for oil think about china, brizil, india are rapidly developing and need oil. What happens? Price of oil goes up. Very simple economics.
You should be wondering how it moved down $4 and back up $5 so EASILY. Its all speculative at these levels. No one was on bid last night because everyone knows how much downside there is. This is fed day; look at currency, soybeans, everything else. Funds are challenging Bernanke. I hope he doesn't screw this up, otherwise $100 is the least of our worries.
Funds aren't challenging Bernanke, they are riding him on this grand inflation ride which we haven't seen since the early 80s. The markets are going to extremes after Bernanke's cut, there really is no risk out there, the only risk there is to hold worthless dollars in Treasuries or money market funds collecting 4% which inflation is 10%.
Besides the rising demand the price of oil goes up because it is denominated in $$'s. I think oil trades themselves are already done in local currencies or EUR or GBP. In a year or 2 the big producers will not accept US $'s for their oil. When that happens the US$ will become worthless as a currency and will not be useable to pay for that part of consumer goods that are imported, ie. about 90% of them. I don't want it to happen because it will take a lot of good economies with it in it's fall, there will be a lot of grieve and probably a new war, but I think it is inevitable. Ursa..
Goldman was short out the wazoo @ 93.50 the day before! Don't worry they will reiterate a sale at $100.
Scriabinop23, Correct, and it's become progressively more noncom/spec driven, to the point that there's little/no relation between price and fundamentals but instead price and a toolbox of stories. One of which has been the China story, and while no doubt that nation's rapid industrialization increased demand-side pressures, I've found it interesting that even when China demand went flat during 2005, price - though a bit choppier - continued to escalate and the same story continued to be played.