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Thursday, August 21, 2008

Speculation Actually DOES Drive Up Oil Prices

No $#!#.

I first posted about the subject of unregulated speculation being a driving force in the price of oil almost two years ago. This speculation can be demonstrably shown to be disconnected from events in oil-producing regions despite the fact that such events are often used as justification for price increases.

So, seeing this article in the Post today was no surprise to me (emphasis mine):
A Few Speculators Dominate Vast Market for Oil Trading

The [Commodity Futures Trading Commision], which learned about the nature of Vitol's activities only after making an unusual request for data from the firm, now reports that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on NYMEX, a far bigger share than had previously been stated by the agency. That figure may rise in coming weeks as the CFTC checks the status of other big traders.
Here's another quote that illustrates how ridiculous the charade that oil prices are determined solely by supply and demand.
Oil roared above the $120 a barrel level on Thursday and gold prices jumped amid mounting geopolitical tensions following Russia’s decision to suspend military co-operation activities with Nato in response to a missile shield agreement between the US and Poland.
So, the invasion of Georgia was two weeks ago (and oil went down) but now the situation is making oil go up $6 in one day?

Bull$#!#.

Comments on "Speculation Actually DOES Drive Up Oil Prices"

 

Anonymous VABreeze said ... (10:59 AM) : 

Wall Street Journal had a similar article last Friday on same issue - some of the "speculation" of lack thereof is based on how traders are classified.

 

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