Basically, you are correct. To be fair, speculators can push prices out of whack for a while. Like recently, when politicians and a lot of Americans were complaining that 'speculators are driving up the price of oil!' 'The price is not based on Supply and Demand!' Now, they might have a point, albeit one that is near impossible to prove. Perhaps speculators have pushed prices out of whack with what Supply and Demand would dictate. That happens because they are speculating on 'what's going to happen to Supply and Demand in the future'. Obviously, they can and do get it wrong sometimes. Sometimes they speculate that supply is going to drop sharply and this will drive futures prices higher. Which sucks for us right? Because now we are paying more than we should, based on actual supply and demand. But sometimes the speculators get it wrong and overestimate supply (for example) which means that we're all paying less than we would if we were to rely on actual supply and demand alone. People that blame speculators simple don't get this basic concept. The existence of the futures markets means that we all pay less for our goods over the long haul.....less than we would pay if we were to base price on Supply and Demand alone.
he doesnt know anything. the gurus on et have said that speculation has nothing to do with oil prices. that settles it. after all who are you going to believe.
you know it's speculation when volume INCREASE in rising prices in speculative market In a normal market, volume normally DECREASE in rising prices. that is 'evidence' of oil 'speculation' too much speculative money in commodity markets. As for daytraders of oil or swing traders of oil,,,daytraders of oil don't care about trending markets. daytraders are not speculators.
If fundemantals were moving the markets we would see $10/barrel due to tons of oil stocked in Cushing, OK. Oil price is high because of speculation.
Explain this to me. How does futures market make the oil price lower than had it been based on demand and supply only? I am not understanding.
============ S2007; I see your points. Oil & unleaded gas do seem to have an unusually high percentage of people blaming long bias speculators. Actually that is part of the problem Probably just as helpful, maybe more; cut the EPA budget I wish all of them had the guts to say; another major reason for high gasoline/oil prices is the same reason for excessively high corn prices- too much gov regulation. Free enterprize may help.CME has an article about Excessive Speculation & Position Limits. Funny but true, a local BP dealer has been lowering his prices; but he bought a bigger sign
You better believe it. This is when CEO's put on there politician hat and sway to whatever the public wants to here. The price is the price, deal with it. I love it how the CEO's love to point fingers at something besides the root source cause of the problem and the sheep and uninformed give the buy in. These phantom speculators must be real bad people (sarcasism to the max). CEO's have turned into nothing more than PR figureheads that ride shareholder money. The main job for anyone in this market is to trade the trend. Oil $200.00 USD anyone? Akuma
Today is saturday 06.18.2011 and I have been in Houston over 10 years, I have never seen Saturday traffic this light. I wish gas hits $10 and allroads will be mine.
You're dead wrong. The Fact is that both WTI and the Brent grade are de cheapest one in the spot market. Right now the Tapis grade is trading at $123.24. The Dubai 1M is trading at $110.15, Louisiana Sweet $116.51, Bonny Light $118.58, Minas is trading at $115.47. Non of those grade trade in a formal exchange. The WTI is trading at $99.16 wich is the cheapest grade at this moment and the Brent Blend is trading at $117.08. The Biggest speculator in Crude oil is the Federal Reserve with their USD policy. In fact, the Physical Players have more influence via the OTC market than Exchange Speculators.