OK I don't pretend to understand the futures market and hedge funds any more than any other person who has seen the movie Trading Spaces.
They tried to explain it in my finance classes and the gist of it is that people speculate on whether the market prices will go up or down (be it for oranges, oil, corn or whatever)
People who don't actually intend to BUY oil get involved in this speculation. They basically *bet* on the fact that the price of oil is going to go up (or down.) If it goes their way, they make money. Most of these people don't actually BUY oil. They just influence the market.
Here is a very interesting Consumerist articles that tries to explain it:
Gas Prices: Why Was Gas So Expensive?
For the record, I paid $2.49 on Monday. I'll check to see what it is today.