This argument doesn’t hold water. It’s like claiming Ford can make money by buying up Ford stock.
As a trader tried to bid oil futures past market levels, he’d be spending more and more to inflate the price. To make money he has to be able to sell back all the contracts he bought at above-market prices.
That can only happen if his play was fundamentally correct and other traders agree the price should be there...meaning there wasn’t anything “artificial” about the move and nothing was “inflated”, it was just the old price moving to the market price.
If he’s truly artificially inflating the futures, he’ll then be long a ton of expensive contracts as sellers step in to take advantage of the idiotic prices being bid. The price gets slammed back down where it belongs, and he loses.
Oh and if he’s doing it enough to significantly move the market, that means his position is massive, and traders will notice. Traders being the vicious bunch they are will attack the huge long position once they spot it, aggressively selling because they know the guy behind it is probably highly leveraged, meaning his loss gets substantially bigger at each price move...that means he has little room for error, and as soon as traders start to hammer it he’ll exceed his margin and have to puke his position for a massive loss (in doing so, letting the traders who sold against him buy their shorts back cheap and make money...their reward for forcing the market back to efficiency).
You can’t both build up a position big enough to move a market AND be able to liquidate out of that position for a winner. It’s like thinking you can make money by buying your own product if you just buy enough of it...or powering your house with a fan pointed at a windmill. TANSTAAFL.
Your points are very well-made, but what about in a world-wide scenario where the big players are the sheiks who have their hands on the oil spigots? If THEY were the ones taking big positions through hedge funds, couldn’t they just protect themselves by turning supply up or down? Just asking...