I believe that current prices are probably above medium-term equilibrium - due to overshoot and inelasticity - prices, but by how much is an open question. I wouldn't be surprised to see $80 again for a while at all. I wouldn't be madly surprised to see $200 either. I would be surprised to see $20 again.
I think it's an unusually opaque market with quite a bit going on out of sight, so usual rules may not apply.
I would expect $80 if Iraqi production ramped up to pre-1990 levels, or the Falkland oil fields turn out to be substantial and not an investment trap, or if the US economy implodes in a spectacular 1929 kind of a way.
Iraq may be up to pre-1990 levels by 2010 or maybe 2012. The Falkland field is trading well as a speculation, but the rumours have been around for a decade and a half and there's no substantial output yet. The state of the US economy a year from now is anyone's guess.
China and India continue to grow and China continues to subsidise consumption, I think all we'll see is a move from Western use to Chinese and Indian use. So I'd be very surprised by $80. I'd also be surprised by $200. But a steady run at $120 and upwards doesn't seem so impossible.
I can imagine $100 at a stretch, but I'd guess that's at the lower end of likely.
The facts are ... spike. If you look at it that way.
I think you should say: "The fact is that, if you look at it that way, it's a spike".
(Proposition N°2: "The fact is that, if you look at it another way, it's not a spike")
