Oil bubble?

According to Shell Oil president John Hofmeister, the “proper” range for oil should be somewhere between US$35 - US$90 a barrel. Meanwhile, Idris Jala current MAS MD and former senior executive with Shell Plc said the fair value of crude oil at present is “US$40.”

Global demand for oil this year stood at 88.88 million barrels per day while supply were slightly lower at 86.60mbpd. Saudi Arabia is planning to increase oil production next month by about a half-million barrels a day to ease the political and economic effect of high oil prices. The spike in oil price over 50% in less than 12 months to USD134 currently would softened oil consumption growth.

Its seems that there are no shortage of oil supply but suggests that the phenomenal increase in oil price maybe partially an act of speculators. Other factor is weakening US dollar. Crude Oil is traded in US currency. In the face of a declining dollar, with the relative price of oil being set in equilibrium, the dollar price of oil must rise.

We also have to take note that the USD downtrend seemingly trying to reverse its persistent weakness. So, is it will be the end of oil bubble?