Oil Prices, China and India

According to Platts the big Indian and Chinese demand for oil is squeezing the supply and keeping prices volatile:

Oil prices have been notoriously volatile in recent years and 2005 has seen a continuation of this recent trend, whilst prices have established new all-time highs in most energy markets. In fundamental terms, continuing very high oil demand from Asia's powerhouse economies of China and India in particular have squeezed the supply/demand equation. Even as OPEC has pumped out additional oil to alleviate the global supply-demand squeeze, sweet crude benchmark prices in particular have recently soared to approach $60/bbl, with some analysts even anticipating a 'super-spike' to $100/bbl or more. Speculative funds do not yet appeared to have relinquished their interest in energy markets, which adds another strand to the price equation, given the weight of money that such funds can deploy, especially when natural sellers within the oil industry may be holding back. Nervous sentiment continues amongst global traders and end-users as the difficulty of trying to hedge energy prices at such high levels has been compounded by the fear of not doing so, should the direst warnings on price be substantiated.

and don't forget that old devil "refining capacity":

Meanwhile for upstream producers and refiners, these high prices have presented a different kind of dilemma in hedging terms; whether to sell such apparently high prices in forward markets whilst they are available, and which may not be able to be achieved indefinitely, or to adjust their expectations to a 'new paradigm' of permanently high oil prices. The condition and capacity of global refining and pipeline infrastructure may have to wait for funds released by collateral sales of forward energy before the necessary refinements and capacity can be undertaken and thus have any effect in adjusting supply better to continuing high demand.