I thought i’d point out a few figures i remember
back in 1999 when oil was back near $10 a barrel i read/heard that there was a surplus in supply of between 2% to 3%, which was why it had dropped from the high $20s.
I heard Boone Pickens and others point our there is a 2+ Million barrel shortage in an 80 mill barrel a day market, about 2.5% under supply.
It seems that certainly seems to be the other side of the same coin. A year of so ago, oil at 60-70 was seen as the expected price range
Demand in 2008 is estimated at 87 million barrels a day, 2007 production was 81.5 million barrels. So there could well be a gap shortage of of nearly 5%.
These major oil producers have had dropping output for the last several years:
Venezula (major us supplier)
Mexico (major us Supplier)
Iraq
Iran
north sea (UK, Norway)
I’m sure speculation is a big part of this, but it also helped keep prices low 10 years ago.