Culprits in last year's energy spike reappear (AP via Forbes.com)
Oil prices pushed to new highs for the year Monday on a weak dollar and new data suggesting manufacturing in China has strengthened.

Yet the pace at which energy prices rose in May has also raised questions about what is causing the surge.

One reason may be found in the number of large speculative positions taken on Nymex. The net increase in bets that benchmark crude will prices will increase rose by more than 14 percent last week, according to a report from the Commodity Futures Trading Commission.

A lot of that money is being driven by inflation fears as the dollar falls against other major currencies.

Hope and anxiety (The Economist)
The price of a barrel oil went past $68 during the day on Monday June 1st, the highest level in seven months. Although this remains less than half the peak of last July, prices are likely to remain above the norm of the past few decades, lifted with every bit of cheery economic news and as the dollar weakens. Some economists are now again talking of the approach of “three-digit oil prices”, in part as large emerging economies, such as China, India and Brazil, which are energy-intensive, appear to emerge from the worst of the downturn. In the longer term, prices could be pushed upwards thanks to demand from the emerging world and because of difficulties increasing global supply.

Labels: economics