The Washington Post’s Steven Mufson notices that oil prices aren’t behaving as we’d prefer, having climbed from under $40 per barrel to back within sight of $70 per barrel in just a few months. What gives?

There’s plenty of evidence to suggest prices should be falling. In industrialized countries, storage tanks are overflowing, with enough supplies to cover 62 days of use, about 10 days more than usual. Economic weakness continues to depress world demand, which is on track to fall for the second consecutive year. And oil-producing countries, while restraining output, are adding to production capacity. New Saudi Arabian wells coming on line this year will exceed the entire production capacity of Texas.

That first data point — overflowing storage tanks — is all about contango. That is, the price of oil for future delivery is higher than the current price; markets think oil will be more expensive in the future. The natural thing to do in such a circumstance is to buy oil now and store it until later. This is more cost effective than usual, given the levels of current interest rates.

What about the broader story — that economic fundamentals don’t justify the increase? Well, oil prices are expectations driven. It’s a scarce commodity, and supply can’t respond immediately to demand. Early this year, demand forecasts were tumbling even as production remained elevated, a holdover from the 2008 price spike. These dynamics have changed sharply. While the global economy remains depressed, the outlook is considerably more positive than it was back in January. Meanwhile, the economic collapse and credit market freeze shut down many of the efforts to gear up exploration and production which had been begun last summer. Market fundamentals are pointing toward a higher price.

So, too, are financial conditions. Low interest rates and a falling dollar are generally good for an American recovery, but both also tend to support oil prices. There’s a difficult balance to be walked there. Rising oil prices act like a large tax increase on American consumers, which is bad news for the economy. Rising crude prices are like a parachute attached the back of the American economy; the faster we go, the more that parachute exerts a drag. It’s tough to get up to speed under such circumstances.