From :

Commentary: Speculators hit the exits, and we're all a-Twitter

****************************EXCERPT*********************

Speculators exit

What happened to the global demand that was fueling record oil prices?

You remember: The world, driven by the hothouse economies of Brazil, China, India and Russia, was consuming oil at such a rate that the price of light sweet crude was going to soar to $200 by July 4.

For a while, it looked like it might happen, if not on Independence Day then by the end of the summer. Oil hit $147.20 in the Nymex pits on July 11. It sputtered and has been in close to a free fall ever since, losing 21% over that span.

Now, the expectation is that oil will sink to $100 a barrel. See full story.

So what's changed? Not demand. It's still creeping along. The world will use 1.1% more oil next year, about the same growth rate as this year and the year before, according to the International Energy Agency. China's share is growing but at about the same 6% rate it has been for the last four years, IEA estimates.

Supply hasn't changed. Even if offshore drilling becomes a reality, it's unlikely to have a profound effect on supply, and it won't happen soon. Many experts say such drilling isn't even necessary. After all, there is no oil shortage, just higher prices.

Could it be the end of speculation? As we pointed out in May, between $100 billion and $120 billion in new speculative money entered the energy markets during a three-year span ending in 2006, according to a congressional report. Investment in commodity index funds surged more than 500% to $80 billion during the same period. Hedge funds do 55% of derivatives trading, according to a study last year by Greenwich Associates. See earlier column on speculation.

Fearing a top, a lot of that money has pulled out or gone short. But don't tell that to those who say big oil companies and global growth are to blame. They seem to think demand is coming from a very specific region: Fantasyland.

Twitter

Working Link for text in post #3:

Talk of $200 oil by year's end quietly fades

*******************************EXCERPT***************************

Myra Saefong's Commodities Corner

Talk of $200 oil by year's end quietly fades

New estimates point to a drop to $100, but that's not too shabby

By Myra P. Saefong, MarketWatch

SAN FRANCISCO (MarketWatch) -- Talk of $200-per-barrel oil prices by the end of the year has quietly faded away and been replaced by forecasts for $100.

It would be easy to say that crude oil has failed to meet market expectations, and a bear market may be in place. But the harder part is to figure out how long and to what point oil prices will fall.

Projections earlier this year for oil prices as high as $200 fell flat, with prices unable to even reach $150.

"Now analysts are lining up to say the top is in," said Sean Brodrick, a natural resources analyst at MoneyandMarkets.com. "I've been saying all along that volatility is the name of the game in oil this year."

He expects prices to move lower in the short term -- $120, $110 or even $100 "if we're really lucky."

Supply hasn't changed. Even if offshore drilling becomes a reality, it's unlikely to have a profound effect on supply, and it won't happen soon. Many experts say such drilling isn't even necessary. After all, there is no oil shortage, just higher prices.

The only time there's a shortage of anything is when the government censors the expression of the relation between supply and demand by regulating price. No price controls, no "shortage."
But the relation between supply and demand - the price - will be affected by relaxation of the restrictions on supply.