Are Speculators Behind Oil Price Surge?

"The run-up in oil prices that began earlier this year was not as steep as last summer's record climb, but it was almost as mystifying.

Demand was low, the global economy was sagging, and the world's oil consumers and producers were brimming with excess supply. Those factors ought to keep prices down, but the monthly average price of crude oil jumped $10 a barrel from February to April, another $10 in May and again in June. Gasoline prices in the United States rose 54 days in a row, and AAA called the increases through May 'the largest five-month retail advance this century.'

Then over the past 10 days, oil prices tumbled back, falling to $59.69 a barrel, to the lowest level in eight years, summoning memories of last year, when prices hit a record $147 on July 11 before falling back down. Renewed pessimism about the economy was one reason for the 10-day swoon, but the abrupt shift has been dizzying. And not entirely reassuring. Many regulators, oil analysts and oil executives say that the lurches in price this year -- even more than last year's -- must be attributable primarily to one factor:

Speculators."

Steven Mufson reports for the Washington Post July 14, 2009.