The 70 percent rise in crude oil prices from the lows of $27.1 per barrel to a high of above $46/b in a matter of three months is being driven by speculative activity—make no mistake about it. The speculators have latched on to every bit of rumor and news to bid prices higher, and this has nothing to do with the real fundamentals.
However, speculation can boost prices only to a certain extent in the short-term. After this, the fundamentals take over.
