What if there is a link between what analysts affiliated with investment bankers predict on oil prices, and what their oil traders are up to in the futures markets? Speculation is rampant about the impact of speculation. Billionaire investor George Soros told Congress this week that the blame lies in part at the feet of speculators. Fereidun Fesharaki, chairman of Facts Global Energy, told the Reuters Global Energy Summit this week that “the push beyond $100 to current levels was the result of excessive speculation. It is very likely and possible that we will go back again to the $100 range as speculators take profits and go out of the market. It could happen by end-August or at the latest by September.” Congress is looking for conspirators. Wall Street banks are already under scrutiny from lawmakers who “seek a convenient villain for skyrocketing oil prices,” says a daily note from Pritchard Capital Partners. On June 5, Rep. Bart Stupak, D-Mich., complained that oil and products markets were being “manipulated” by the biggest trading houses in the futures markets, although he said a probe hasn’t uncovered anything illegal, according to a Pritchard daily note. “In response to a reporter’s question, Stupak identified Goldman Sachs and Morgan Stanley as firms whose oil trading activities warranted closer review. The two firms quickly defended their conduct and Stupak later went on CNBC television to say no specific firms were under investigation.” We have to note that analysts from both Goldman and Morgan Stanley have said in recent weeks that oil will go higher. Goldman said it could be as much as $140 a barrel this summer and $200 later on. Meanwhile, Morgan Stanley’s shipping and tanker analyst, Ole Slorer, said oil could be $150 a barrel by July 4—not due to speculation, but due to oil shipping patterns. “We are calling for a short-term spike in oil prices,” said Slorer in his June 5 report. “Distribution patterns of crude oil out of the Middle East…are setting record volumes to Asia,” he said, “while supplies to the Atlantic Basin are at rock bottom.” He said that since March, oil in transit to the Atlantic Basin has collapsed by 30 million barrels and U.S. oil inventories are now down by 35 million barrels from March through early June. --Leslie Haines, Editor in chief, Oil and Gas Investor, lhaines@hartenergy.com