Thursday, August 14, 2008

Speculators a Big Part of the Oil Market: Confirmed

As I have suspected since oil prices went to record highs it seems that speculation had a large part to play in high oil prices this summer and not supply/demand problems or whatever Ole Slorer of Morgan Stanley trotted out.

"There may have been multiple 'positions' which were reclassified ... but they all appear to have been held by just one trader, and this was a very special trader, with an enormous concentration of positions in crude oil amounting to perhaps 460 million barrels, and not much interest in anything else," noted John Kemp of RBS Sempra Commodities.

460 million barrels is the equivalent to almost 21.9 days of US oil consumption all tied up in the positions of one trader. You would figure that if one speculator controlled $54 billion dollars worth of oil then prices are likely to rise or fall depending on what that that person or firm does. My money is on a massive pension fund doing the trading and that is why the Commodities Futures Trading Commission won't disclose their name. In any case that trader cost a lot of Americans a lot of money at the pump this summer.

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