London (Platts)--1Jul2008

There is little evidence that current high oil prices have been caused by
the large inflow of speculative money into futures markets in recent years,
the International Energy Agency said Tuesday.

In its latest medium-term oil market report, the IEA said high prices
were instead justified by fundamentals of supply and demand.
"There is little evidence that large investment flows into the futures
market are causing an imbalance between supply and demand, and are therefore
contributing to high oil prices," the IEA said in its report.

The increase in money flows in futures markets has coincided with a sharp
rise in oil prices, leading some to conclude that this new investment is to
blame, but the IEA said there was "no clear evidence of causality."

The IEA said high prices were due to a number of factors, notably low
spare production capacity, geopolitical concerns, high forward refining
margins, expectations of rising future prices, higher costs, the weak US
dollar and tight refining capacity.

"A simple look through the history of commodity markets should show that
explosive price movements are symptomatic of an aggressive tug-of-war between
supply and demand. Blaming speculation is an easy solution which avoids taking
the necessary steps to improve supply-side access and investment or to
implement measures to improve energy efficiency." the report said.