The race is on. The U.S. and Canadian averages continue to put distance on last year's prices, and the race isn't even over. Prices across both countries continue to spike, with the national average in the U.S. rising to $3.71/gal at this moment (up nearly 20c/gal in the last year), while prices in chilly Canada rise to an average of 127.7c/L, up 3.3c/L over the same date last year.

2013's breakneck pace is certainly causing me to sweat. What the heck is going on? The Middle East certainly is a bit more chill this year than last, no refineries on the West Coast have spontaneously combusted (knock on wood), and the Keystone XL pipeline still hasn't been approved. In addition, oil supply is more than plentiful, rising 10% over last year. So where's the smoking gun? Quite frankly, there isn't one.

We've disclosed in past analysis that when the Dow tracks up or down more than 100 points in a session, oil prices follow in that direction and to a similar extent 90% of the time. The media has been reporting that the Dow has had one of its best January's ever, perhaps contributing to the rise in oil prices. Keep in mind what I said earlier, this all flies in the face of oil inventories that have risen 10% vs. last year.

In addition, I believe increased optimism surrounding the economy is influencing prices, and the CFTC seems to agree. “There is plenty of reputable and reliable evidence documenting what many of us simply know: that excessive speculation can contort markets,” Chilton told an audience in Jonesboro recently on the Arkansas State University campus, according to a transcript on the CFTC website. That excessive speculation may be coming into play as more players throw money into oil, believing their warm and fuzzy feelings on the economy will spill over into the middle class spending more, thus increasing demand for gasoline.

Chilton went on to say “Our staff has looked at trading in crude oil and has found that commercials are a part of only a tiny fraction of the trades that account for price changes. In other words, non-commercials — speculators — are dominating the price discovery process in crude oil,” Chilton said. “The issue isn’t whether speculators affect the market; the issue in many instances is that speculators have become the market.”