Reports of Oil Boom's Death Look Premature

After falling sharply Thursday and slipping below $125 per barrel in London earlier Friday, oil prices were recently rebounding in New York trading.

Still, oil's fall from its recent peak above $135 has revived discussion about whether the "oil bubble" has popped.

While it's undeniable speculation has contributed to oil's rise, it's premature to declare an end to the oil boom -- if only because so many speculators are betting on falling oil prices. Bubbles typically don't peak until all the bears throw in the towel, and we're a long way from that when it comes to crude.

It's also important to note that crude has had 20%-plus corrections in each of the last five years -- short, sharp corrections being classic bull market activity.

Fundamentally speaking, factors such as the weak dollar and rising demand from emerging markets likely have contributed much more than speculation to crude's ascent. Many oil exporters in the Middle East are using more crude as their local economies grow, meaning there is less oil to export, as The Wall Street Journal reports.

Finally, advocates of "peak oil" theory will tell you that oil's rise is almost exclusively about fundamentals.