Oil: Speculating on higher prices

News from China and Washington could send the price of crude higher down the road.

NEW YORK (Fortune) — Oil prices hit their highest level in a month Monday on hopes that the U.S. economy was finally on the road to recovery. Still, that recovery is taking a lot longer than oil traders had hoped. Prices are nowhere near their all-time high of $147 a barrel a year ago.

Longer-term, what does this continued softness at home mean for the direction of prices? Our guess is less than you’d think.

It’s been some time since U.S. demand was the primary driver of global oil prices.

Between 2000 and 2008, U.S. oil consumption actually declined 1.5%. What drove oil prices ever higher was skyrocketing energy demand from developing nations such as China and India.

Oil consumption rose 64% and 38% respectively, in those countries from 2000 to 2008. So when the global recession took a whack out of the emerging markets — at one point the International Energy Agency was predicting oil consumption in China would actually decline in 2009 — oil prices plummeted.

CNN