We are seeing multiple dissociations between facts on the ground and prices of assets. Either the prices of assets are forecasting some wunderkid nirvana coming down the pike or we are simply in the hands of speculative juices by return hungry, fast trading folks of both the institutional and retail type. When assets go up with no good reason, the defenders of market efficiency like to speak of the "all knowing" Oracle like nature of the markets (i.e. it was forecasting great times ahead as it raced to all time highs in October 2007) - we instead like to call it "thesis buying".  Find a thesis, build a story around it and buy.  If it comes true in 6 months down the road - really it does not matter.  As long as you get a critical mass to believe it now, we can create a nice story.  But when the music stops, just make sure you have a chair (i.e. sold your asset to the greater fool)

Now with the Federal Reserve involved in heavy fiat paper multiplication, and so many yard markers under the influence of the Not so Invisible Hand we have yet another complication to the normal complications of the markets.  If we believe inflation to be the "solution" over deflation, we bid up hard assets.  Even in the throes of the worst recession since World War 2.  We've talked in the past that even those in the oil market themselves see no good reason for this run in oil  [Mar 27: Thesis Buying 101 in Oil - Even Experts Mock It [1]]  But it continues ever upward.  Inflation hedge? Pure speculation? Forecasting some great demand spike "in 4-6 months"?  I don't really know but I find it hard to place my bets on the latter outcome (i.e. green shoots) as we stories like this [2] from the UK Telegraph

• Rotterdam, Europe's biggest port, is running out of room for more oil, US reserves are at a 19-year record and tankers are being used as floating storage off Britain's south coast, even though OPEC is reducing production. 
• "From a commodities point of view, world trade is appalling and the demand is just not there," said Ahmad Abdallah, commodities analyst at Gavekal, the economics consultancy. "All inventories are rising – they are bursting at their seams."
• Oil prices rose to a five-week high last week above $53 a barrel in line with the recent bull run on the world's equity markets. Yet despite an OPEC decision last November to cut output by a record 4.2m barrels a day, a move which began to come into effect in February, the fall in demand has been even more striking.
• Goldman Sachs estimated last week that global storage capacity could be exhausted by June. Government figures in the US, the world's biggest oil consumer, put reserves at 375m barrels, rising by 4m barrels in one week in April alone.
• One estimate said that in addition 100m barrels were currently being stored in tankers at sea across the world.
• The weak demand for oil will add fuel to the arguments of those who argue the current bull run on the equity markets is a classic fools' rally.  "The further (the oil price) rises, the more sceptical you become," said Mark Pervan, head of commodities research at ANZ. "We are operating in a global recession and oil markets are a proxy for global growth."

But hey, other than that, go buy some oil - it is clearly forecasting the return of green shoots worldwide.  Especially in storage facilities.  Ahem.