So why are prices so high if demand is tepid? Look no further than Wall Street, where speculative bets on rising oil prices via futures and options amount to the equivalent of 323 million barrels -- four times what Gluskin Sheff economist David Rosenberg calls a normal level.
He says that simply reducing that position by a third, to levels seen last fall around the start of the Federal Reserve's second quantitative easing program, could bring the crude price down to $85 to $90 a barrel.
Schork says $90 oil is entirely plausible, given how little economic fundamentals have changed since the speculative run in oil started at the end of 2010. He attributes much of this year's gains to hedge funds and other traders levering up to bet on commodity prices, which have obliged by surging since Ben Bernanke promised in late August to support the economy with looser money.
The Fed's latest senior credit officer survey reported increased use of leverage by investors such as pension funds and hedge funds.
"The Fed is giving these guys money so they can bet on prices going up," Schork says. "There is probably a $15 or $20 premium in the market because of it."
