Another record high today for oil, this time above $126 a barrel. This past week saw the biggest weekly gain since March of last year. Today’s record was fuelled partly by speculation that Nigerian export cuts would hurt US supply during the consumption heavy summer months. Strong diesel demand coupled with the market’s stronger belief that $150-$200 oil is a reality also helped lead the surge.
It’s possible the world is reaching a price where demand (or at least demand growth) can materially be affected. But short of that, the fundamentals don’t point down.