Crude oil prices are trading at $80 per barrel, which is an "artificially high" price, says Stephen Schork, editor of the Schork Report.
Schork told Yahoo Tech Ticker that speculators are to blame for the rally in prices.
Goldman Sachs has estimated that oil prices will stay in the range of $85 to $95 per barrel for 2010.
Schork said fundamentals do not factor into the price per barrel.
“We kind of have this backward economic logic where we bid up oil prices very high, expecting this demand to return. In very few circumstances do we push prices to a very high level and then expect the demand to occur,” he said.
Oil is now being used to hedge against potential inflation by Wall Street while refiners are being squeezed by the low margin and some are being shut down, he said.
“The industry, to protect their margins, has to take matters into their own hands,” said Schork.
The market had counted on a rise of gasoline inventories, but when they were reported to have fallen, the news still boosted prices of crude, Agence France-Presse reported.
"If the bounce in U.S. gasoline demand persists, this may represent the beginning of an extended period of outperformance for gasoline over other oil products as vehicle miles traveled progressively increase in both the U.S. and Chinese markets," said Nic Brown at Natixis.
Some analysts predict that higher oil prices will remain, Bloomberg reported.
“That the price of crude keeps going up despite inventories highlights the fact that growth is the story. This is the perfect storm for a bullish crude and a bullish commodities story,” said Jason Schenker, president of Prestige Economics, an Austin, Texas-based energy consultant.
Oil prices are also being moved by volatility in the stock market.
“The equities correlation is starting to pick up again. As the Dow goes up, the oil goes up, and as the Dow goes down, the oil goes down,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
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