With oil over $135, executives claim it should be trading at $35 - $90

Oil raced to $135 on Wednesday going further into uncharted territory. With these higher prices, crude oils open interest has dropped 8.1% in a week, indicating that money is being removed from the market. Specialists claim that this drop in open interest is due to the fact that speculators that expected oil to drop, had been forced to exit their positions. Open interest has been sliding for some time, or since the open interest reached a top on June 16, 2007.

Oil prices have been climbing aggressively, prompting OPEC leaders to declare this rise to be speculative driven rather than being based on supplies. OPEC has been reluctant to increase production, demanding a proof of lower supplies or higher demand, to support claims that the price increase is related to supply and demand factors.

Yesterday oil executives told congress that oil prices should be somewhere between $35 - $90 a barrel, with the president of the Shell oil co. John Hofmeister, claiming that the prices should be between $35 - $65 a barrel. With oil trading above $135 a barrel, the demand for biofuel has grown as the high price of oil has made the production of biofuel more attractive and economically viable.