http://www.energytribune.com/articles.cfm?aid=1239 The crude-oil market needs more speculators to help stabilize prices six months after the traders were blamed for pushing the commodity up to a record $147.27 a barrel, Deutsche Bank said in a report. Don't we all agree ?
Great. I don't know if I am wrong, but I have always thought that on futures markets, all those that take or give delivery have a much bigger impact on prices as they only buy or sell 1 time in the futures market( in huge size), while speculators are more neutral as for every buy there is a sell...Speculators are responsible for noise but not for the big picture move IMO... Is it stupid?
There are speculators such as Citi and other major players that buy it for delivery and store it aboard oil tankers in hope of price increases in the future. That will affect the price, whereas a one lot trader that closes the position the same day or before expiration will have virtually no effect - as you state http://www.bloomberg.com/apps/news?pid=20601087&sid=aEWDPKUnbmm0&refer=home If you look at the times/sales you can see that the majority buys/sells 1-2 contracts at a time. These are what provides the liquidity and reduces the spread. Unfortunately, in the public eye, all speculators are evil.
More often than not you're right-commercials are a better tell than gamblers BUT the huge amount of leveraged money that entered trend following commodity funds in 06-08 clearly over whelmed the selling impact of commercial hedgers. The DB take is flawed. Deferred futures months in CL are friggin' PUMPED vs. near by so there is STILL a speculative long interest in oil- it's just isn't manifest by the softness in spot prices.
Interesting. Nobody has a friend in the NY Times to explain this to the masses? Next step, the public wants a transaction tax on the big banks and exemption for the little guy...LOL...Just imagine the money we would make.
Oil market is a small market relative to the stock and bond markets. World uses about 80 million barrels of oil a day x 50 is only 4 billion dollars per day. Stock market runs over $150 Billion a day. Currencies $1-2 Trillion a day. Small size of market makes it easier to move around. John