I used to be a firm believer in an ever-increasing oil price not too long ago, based on the rather unambiguous data concerning availability of supply. However, I did not expect the sharp reduction in demand that has unfolded since last fall.
Now I don't know what to think:
If/when the world economy starts growing again, demand will soon bump into a hard supply constraint. From what I understand, the marginal cost of bringing new supply on line is higher than the current oil price, and in addition, the amount of new supply that can be brought on line without needing too much time and effort is limited. As existing wells decline, total potential supply will stay at best stable, it might even start declining.
However, demand may continue to contract or at best stay stable for quite a while, depending on how the crisis works out. In particular, if worldwide unemployment goes up sharply, the need to commute to work (one of the main reasons for using a private car) will decrease noticeably. There are signs that the US is finally weaning itself off the worst aspects of its petroleum-addiction: Gas guzzling monster-cars no longer sell, and outlying suburbs are suffering worst in the real estate disaster. And there's lots of excess oil being stored in all available ships and storage facilities, just waiting for a time of higher demand and higher prices (and China has apparently also used the low prices to sharply increase its strategic oil reserves).
On the other hand, China, India, Southeast Asia and the Middle East will inevitably see growing demand for oil. Maybe not so much this year and next, but thereafter, demand will grow again, even if developed countries' economies stay sluggish.
So this is what I predict:
In the short-term, there is excess supply, and the oil price will depend mostly on the behavior of oil-producing countries (to what extend can OPEC succeed in bringing production down?), and I won't even try to predict their politics.
But in the mid- to longer-run, supply-constraints will become binding again, and then the oil price will go up very sharply (if it triples from today's level, it will only be back to last summer's highs in US$ terms).
So I have gone ahead and once more invested a few thousand Euros into oil futures, in spite of the rising forward curve (to break even on the rolling futures contracts based on the current curve, oil will have to rise at least 20 % this year, and another 10-15 % next year, i.e. a flat oil price implies significant losses).
I think of it not so much as speculation, but as an inflation hedge.