Speculators keep oil prices afloat

Investors still think oil is a hot commodity, which may explain why crude hasn’t fallen far despite brimming supplies, warm weather and a cooling economy.

NEW YORK (CNNMoney.com) — Temperatures and inventories are high, while economic growth and global tensions, relatively speaking, are low. But although oil prices have fallen in the last few days, they still remain historically high at over $50 a barrel. Why haven’t crude prices fallen further?

Many analysts agree this is due in large part to the amount of speculative investment money pouring into the market over the last two years.

“There is no fundamental reason for [the price of oil],” Stephen Schork, publisher of the industry newsletter the Schork Report said of oil prices in the $55-$65 range. “This is a market that is trading on speculation.”

“In our view, with the current supply demand environment, the price ought to be $35 to $40 a barrel,” said Mark Gilman, an oil and gas analyst with the Benchmark Co., a New York-based investment firm.

CNN/Money