Goldman Sachs is talking about crude oil at $85 a barrel by the end of the year.
Sound familiar? Not quite forecasts of $200 a barrel, but is there a danger of repeating the mistake that the James A Baker III Institute on Public Policy claims was made in 2008?
In a new report, the institute claims that in the spring of that year financial speculators - out of touch with physical oil storage - missed the amount of floating storage that contributed to the subsequent collapse.
EF-pub-MedlockJaffeOilFuturesMarket-082609.pdf
Speculators don't care about the effect on the real economy, only in making money their money and getting out at the right time.
"In 2007-08 dramatically rising oil prices fed US indebtedness. This led to an even weaker dollar, driving oil prices even higher," write the authors of the report.
Index funds linked to the value of the greenback have increased their activity on the Nymex fourfold since January 2006, they add.
Non-commercial players as a whole have been lead indicators of pricing - again from January 2006 - thanks to market liberalisation introduced in 2000.
So do we need governments to use strategic petroleum reserves, as did President Clinton in the 1990s, and the use of spare capacity by producers to take the power away from the speculators?
