Although oil prices are nearing record highs, mutual fund managers appear confident that they will go even higher as the summer driving season approaches.
Their bullish attitude helped push light crude to a new peak of $75 a barrel on Friday, according to Reuters.
Deborah White of SG CIB Commodities, said late Friday that the price surge "seems to be related to the injection of capital that we believe is coming from pension and mutual funds."
Oil has surged 23% this year on the worries over supply and the activity of investment managers. Political tension between the U.S. and Iran, which is the world's fourth biggest exporter of oil, has also had an impact.
Bank of America Analyst Richard Savage said fund skippers are testing just how high prices might go before demand finally wanes. Many Americans are paying upwards of $3 a gallon for gasoline but they haven't dramatically changed their lifestyles.
"We haven't seen significant demand destruction," Savage told Reuters. "The key thing here is that high prices are not due to fundamentals. The market is trying to find that break point.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.