Reply #6: Updated: "the current rally in oil is clearly a revival of absurd speculation" [View All]

[bananas]

Updated by Noel Sheppard at 11:20 a.m.: I wanted to add that the current rally in oil is clearly a revival of absurd speculation ignoring fundamentals. After all, oil inventories are now at their highest levels in almost nineteen years. Add this to reduced demand as a result of a global economic slowdown, and today's prices should be NOWHERE NEAR $60/bbl.

Even with a $10 to $20/bbl geopolitical risk premium, oil should be between $20 and $40/bbl. Readers are encouraged to review Raymond J. Learsy's recent article on this very subject, "Why are We Paying $50 a Barrel for $20 Barrel Oil??"

The only reason oil is now at these levels is because speculators are once again bidding it up irrespective of the current supply and demand. This makes CNBC's $300/bbl discussion irresponsible, for they are once again assisting the oil bulls in driving up energy prices which hurts all of us who are looking to cut expenses in a soft economy.

As last year's run to $147/bbl was clearly a speculative bubble that CNBC helped inflate, maybe these good folks should learn from that and not allow themselves to aid and abet bubble filling again.