>> Out with the usual nimrods who will try to convince us that speculators driving up the price of oil, wheat, corn, etc is actually GOOD for the average person living from paycheck to paycheck.
Well, for better or worse I guess I’m one of those nimrods who believes that speculation IS a significant factor in commodity prices these days.
Time will tell... time not necessarily measured in days.
Time will tell... time not necessarily measured in days.
Speculators may, indeed be driving up the market at a faster rate than the fundamentals...but the fundamentals (supply/demand) are trending in the same direction. The problem with the situation is that in a classic bubble, overspeculation eventually does lead to a huge drop in price...without anything to prop it up. However, in this case, oil producers (mostly OPEC) have the ability to adjust production to re-float the price of oil. So the rising oil prices might not be a classic "bubble".
I was part of a scale trading partnership in the previous life and when the managers wanted to have a little fun with speculative capital they would go gunning the stops in thinly traded markets like cocoa and flaxseed oil. It was easy (relatively speaking) to slam those markets with big sell orders and trigger the stop loss orders, since anyone who could read charts and knew technical trading could tell where the stops likely were placed. Trouble here is, crude isn't exactly a thinly traded market. You'd need a huge flood of sell orders to slam the market significantly. Still, someone like DOE, with the SPR reserves backing up their short contracts, could do it. If people are worried about overspeculation, this would be a way to flush a lot of them out of the markets.