Got to love how successful the govt/media spin doctors have been in persuading the general population that the problems with high prices (in anything) are all the fault of those evil speculators. Never their problem, or the problems of their crazy policies to blame...........
You guys are confusing things. 70% of *open interest*. The noncommercial and commercial designations on nymex don't show the picture. This data is markedly different from the CFTC COT noncommercial position side of things.
Why, is speculative buying not "demand"? Last time I checked, I can hit a bid from a speculator just the same as one from a hedger.
I'm sure this is wrong but I was wondering if someone could explain this to me I can understand how a stock can be bid up so high and sustain that level for quite sometime (a bubble) However I don't understand w/ future contracts how people the speculate? If you are a speculator and buy the month contract, don't you HAVE to close out of the position before expiration (unless you want oil delievered to you) So therefore if there was a huge surplus of buy speculators wouldn't you think that approaching expiration the price would come down (cause they have to get out). So really from my view is the longest it could be in a bubble is the time of the contract.
They are cornering the market. Enron pulled this trick in California. Oil bulls never mention how since the futures markets were de-regulated a few years ago, this is when we have seen the runup in commodities. There is no shortage of oil, wheat, corn, etc. so why are prices rising? This is pure manipulation, and it's being done via sophisticated methods, between parties utilizing Nymex, Ice and Dubai exchanges. They basically trade back and forth with each other, as well as accumulate positions.
1) Speculators operate on the long and short-side of the market. Their participation offsets one another. 2) The proper conclusion is that commercial users "drive" the market. Speculators only go along for the ride. That's one of the reasons why the market doesn't fall apart upon the approach of each monthly expiration.