HMMMMMMMMMMMMMMMMMM???? Goldman Says Demand, Not Speculators, Behind Oil Gain (Update1) By Alexander Kwiatkowski June 30 (Bloomberg) -- Goldman Sachs Group Inc., Wall Street's most profitable bank, said supply and demand, rather than speculators, are responsible for oil's rally. Fears that the rise in oil prices are part of a speculative bubble are ``unwarranted,'' the bank said. There would be an increase in stockpiles if prices were too high relative to supply and demand, bringing excess supplies to the market, analysts Jeffrey Currie and David Greely said in a report yesterday. ``We are not observing anything approaching sustained growth in physical inventories,'' the report said. ``Current prices are supported by supply and demand fundamentals. The commodity markets are not behaving in a way that a speculative bubble would suggest.'' Crude oil, headed for the biggest six-month gains since 1999, rose to a record high above $143 a barrel today. The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world's oil, has said it is powerless to stop oil's rise because it's driven by speculators as opposed to demand and supply. Goldman, one of the two biggest oil traders on Wall Street alongside Morgan Stanley, said on June 17 that revenue from trading commodities rose in the second quarter. The firm doesn't provide any separate figures for the business, reporting it under the category of fixed-income, currencies and commodities. Revenue in this broader segment fell 29 percent to $2.38 billion in the second quarter because of credit market losses. Emergency Powers The U.S. House of Representatives last week approved a bill calling on the Commodity Futures Trading Commission to use its emergency powers to ``curb immediately the role of excessive speculation'' in any market it oversees where energy futures or swaps are traded. ``It is not speculators moving the market, it is the information on forward supply and demand fundamentals that they are conveying,'' the Goldman Sachs report said. The removal of speculators from commodity markets would force the market ``to function with less informed views, degrading the price discovery mechanism,'' the report said. Crude oil for August delivery rose as much as $3.46, or 2.5 percent, to $143.67 a barrel in electronic trading on the New York Mercantile Exchange. It was at $142.17 a barrel at 1:14 p.m. in London.