Since reaching its lows around the end of 2008, just above $35 per barrel, the oil price has rallied a cumulative 175 or so per cent, now standing slightly above $80 per barrel. Naturally, at the end of '08 it was pricing in a disaster economic scenario, a major recession or even a depression. And of course, today, we're pricing in a recovery, but accompanying that rally have been a number of factors that are really actually bearish, not bullish, for the oil price.

We have inventories running at record high levels; at the top end of the range that is normal over the last 10 years. We have spare capacity at 6 million barrels per day across OPEC, a level not seen since 2002, when the oil price was last at $25 per barrel. On top of which we have all sort of other factors that suggest the oil price has got a little bit ahead of itself.

On top of which, accompanying this price rally, we've seen a considerable degree of speculation, such that the net long held by speculators in oil is at a record high level as we stand today. That, on top of the fact that the fundamentals aren't really with the extremes of this rally suggests to us that there are some risks of some downside movement in the price of oil, especially when you consider the outstanding forward-looking supply scenarios that we see over coming months and years.

And whilst for the bulls on the oil price, the case for demand is very strong, most notably the demand we see coming through for oil amongst the BRIC economies - China being the high point of that, with another 10 million barrels per day expected on the demand side in the next five years or so.

The supply side is also interesting, because the spike in the price through to 2008 at $150 per barrel produced a response from the supply side much as you'd expect and economics tells you it should. Indeed, you can group major producers of oil into four key categories. Firstly those producers where supply is declining because politics is poor, fields are aging and the investment environment is not conducive to producing more oil in the near term. That's Venezuela, Iran and places like that. Russia.

Secondly, we have the countries where oil production has peaked and it's well known. They fit the theory of the peak oil theorists well, whether that's the UK or the US having peaked a number of years ago and where production now clearly is in decline.

And then third and fourth, we come to the positive supply cases. Firstly, the incumbents, the large reserve holders - Iraq, Saudi, Kuwait - where supply is expected to increase, has been increasing and indeed in the case of Iraq, we've seen all these contracts signed in recent weeks and months to move production from 2 million barrels per day all the way up to 6 million barrels per day over the course of a few years.

And then of course the last group, the new entrants, the growing supply of oil in the world - driven in large part by China's demand and China's investment - whether it's Kazakhstan, where production's increasing rapidly, Angola producing over 1.5 million or so barrels per day, Canada now the second-largest reserve holder, or indeed Brazil. Add all these together and supply's going to be coming on strong and, and will be significant enough to keep prices under control over the course of the next two or three years.

Beyond that, the bulls have it once again, in terms of the oil price. In the next two or three years, spare capacity as high as 6 million or 5 million barrels per day is likely to keep a lid on the oil price and push the price lower over the course of 2010 and perhaps into 2011.

That was The Longview. You can download this programme from the iTunes Store, from Cantos's website or indeed from our website, longvieweconomics.com. Do get in touch through the website if you have any questions or comments. We hope you enjoyed watching and we look forward to seeing you next time. Goodbye.