Prices for gasoline and heating oil rose in the U.S. this past week, following crude oil. There were no major supply/demand fundamentals driving prices up, and as I mentioned in an earlier entry, supplies of refined products, particularly heating oil, are high. The major factor pushing fuels higher is the declining value of the dollar relative to other currencies.
Speculators are trading their dollars for oil because they believe that oil will do a better job of holding its value. In the past two years, as the economy steadily weakened, oil has become more of a financial instrument, like gold, and has begun to respond less to to changes in supply and demand.