Oil prices have broken $100 a barrel and continue soaring, although investors shouldn't be bullish on the asset for too long, experts say.
Unrest in the Middle East is behind the recent spike, but once political upheaval calms, speculators who have been driving up prices will bolt from the market and dampen oil's rally.
Furthermore, run-ups on oil prices usually come with supply concerns, as is the case today.
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| Some experts say oil prices will fall when Mideast is calm. |
Yet supply concerns normally turn out to be temporary and the resulting price hikes often come hand in hand with increased output as more oil producers rush to get in on rising prices.
The result: supply and demand balance out again and prices settle down.
"As long as there is unrest in the Middle East and North Africa, we're going to have higher oil prices," Douglas Ober, a portfolio manager at one the oldest fund specializing in energy stocks, Petroleum & Resources Corp, tells The Wall Street Journal.
"But once it settles down over there, oil prices will probably come back down. There's a fair amount of speculation in the price."
Oil prices neared $107 a barrel recently, hitting a 29-month high, due to turmoil in crude-rich Libya while the world's largest petroleum
consumer, the U.S., reported that employers added nearly 200,000 new jobs in February, according to the Associated Press.
More jobs mean more economic activity, and oil is needed to fuel that increased growth, provided prices don't climb too high and hurt recovery.
"The economy just seemed to be getting its mojo back," PFGBest analyst Phil Flynn tells the Associated Press.
"The question, now, is when will higher energy prices take that mojo away?"
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