Why oil won't return to triple-digits

NEW YORK (CNNMoney.com) — Oil prices have surged nearly 50% from the start of the year, but don’t expect a return to triple digits anytime soon as worries about the pace of an economic recovery will continue to drive near-term volatility.

“The market is manic right now,” said Phil Flynn, analyst at PFG Best. “This is more uncertainty than I’ve seen in a very long time: big rallies followed by big breaks, and that’s reflective of feelings about the overall economy.”

Concerns about the recession — and more recently the timing of recovery — have translated into some big swings. Just last month, prices swung from a 6% decline one day to a 6% gain the next. While that’s not a daily occurrence, it does signal some trepidation.

On Wednesday, U.S. crude for September delivery rose $2.86, or 4%, to $72.05 a barrel after a weekly government inventory report showed an unexpected drop in oil supplies.

Weekly inventory reports typically influence crude prices but lately the effect has been more muted as other factors gain prominence.

CNN