"This [oil] market remains driven by demand and the low safety cushion. The safety cushion is now roughly half what it historically is, so any disruption anywhere in the world creates the potential for oil shortages. That's why oil is $137 a barrel," Dietz said. "We get a flair up anywhere in the world, such as Nigeria, and all of sudden there could be not enough oil to go around. It's a scary scenario." Dietz added that he is presently long with oil and unleaded gasoline, with monthly contracts.

Daily global oil demand was estimated to be 86.6 million barrels per day for Q1 2008, while global oil supply was 87.2 million barrels per day, according to data complied by the International Energy Agency.

Dietz said a meaningful, sustained price decline in oil can oil occur only after global demand declines, and the safety cushion increases. "It doesn't look like the supply side will be able to do it and eliminate shortage fears," Dietz said. "When China and India start consuming less oil, year-over-year, that will be the market's cue to take oil prices lower, not before."