Oil use to be around $80 before the interest rate cut started in Sept 2007. There has been no sudden demand growth in the last 8 months. In fact,the SPR capacity (500 million to 750 million barrels) which was increased during the state of the union address in 2005 started the upward price movement from around $50 to $80 in 3 years. The oil price is definitely speculation around the world. Add the other commodities, fertilizers, rice etc., you know how bad the speculation is.
Even with the demand growth, the oil would be around $50-60.
The question is when will the shorts be succesful in bringing down the price of commodities and oil. May be that needs a reversal of interest rate cuts by the fed which will not happen until the election is over.
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