[jkarolyi]

BP has a problem with a pipeline...and this sends oil prices soaring in the futures market. Yet, as reported on CNN:

"Victor Shum, an energy analyst with Purvin & Gertz in Singapore, noted U.S. crude inventories are at a 5-year high.

"But the market is in very high anxiety, so a real disruption affects the prices, even if there is no threat of a supply shortage," Shum said.

Sounds to me like the market is entirely driven by specualtors, similar to real estate is being driven by the notion that "They're not making any real estate anymore!".

Could someone explain the oil futures market for me? I always though that oil futures were contracts to buy oil at a given price at some time in the future. But why does this affect the price of oil (and in turn gasoline) today? Traditional supply and demand would have oil prices at 5-year lows right now, not 5-year highs.

So who is buying all this high-priced oil, and where is it going? Are there giant oil tanks being filled up somewhere hoarding all this oil?