Despite Relatively Low Demand, Oil Prices Spike

…The more people use oil, the more the price goes up. When supplies are limited, the price goes up even more. In the oil market, however, the law of supply and demand is just one of the factors affecting the price. For one thing, it is not just the users of oil who buy it; it’s also people who play the market.

“This has much more to do with oil seen almost as an alternative investment,” says Daniel Yergin, chairman of IHS Cambridge Energy Research Associates.

In part, oil investors figure that even if the demand for oil isn’t all that high now, it is likely to grow in coming months.

An anticipated future demand for energy should drive up prices of other energy products, such as natural gas. That has not happened, however.

Market analysts say that is because the anticipated demand for oil is not just about energy needs generally. It is this prospect of oil as an investment that seems to be alluring. Natural gas is not now benefiting from that speculation.

NPR