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Speculation cannot drive the oil prices up longer than a month. At the end of the month, all the contracts come due, you either sell your speculation contract for a profit, or buy the oil.

That, sir or madam, is barking moonbat nonsense. If I want to spec crude permanently, nothing could be easier. When the front-month contract is about to expire (actually 2-3 weeks in front of that date), I sell it back and buy the same or more crude futures in a month further out. Simple as pie.

Where do I find the buyer(s) for the crude I want to sell? NYMEX, of course. Have you checked the volume in NYMEX crude recently? Yah, didn't think so -- there is not only no shortage of buyers (volume in crude futures today is triple what it was five years ago), there is actually a slight shortage of (willing) sellers, because numerous producers have simply stopped hedging their production.

(Guys, dontcha just love these loons? Shee-eesh.)

The bottom line is at each month end, someone actually takes delivery of oil thereby setting the price.

Futures contracts are actually linked to reality, a contract for million dollar an ounce gold is only good for wall paper. It does not make it worth a million bucks to own a contract from someone agreeing to sell it to you for a million bucks a month from now. To pretend that your rich because you can purchase a contract for a million and a half an ounce gold later is what is loony. Just because you can next month buy worse contracts does not perpetuate the madness.

For example, if you insist, I will be willing to sell you a contract for a 2000 dollar a barrel oil due next month for 100 dollars. I will provide for you a barrel of oil for 2000 dollars at months end.

You will have driven the price of oil up to 2000 a barrel for about a micro second when you signed the contract to buy it for that at months end. But at months end, when you try to sell that contract for 2000 and 1 bucks (to make a profit) to someone else and Saudi is selling oil at at 150 bucks a barrel, you might just run into a problem finding a buyer. You either sell the contract, pay me the two grand and take delivery of a barrel or retire the paper as worthless and walk away with your 100 buck loss.

I, as the holder of your paper, will pocket the contract cost you paid and only wish you were willing to exercise the contract and make me 2000 -150 bucks richer. I will if you insist, honor the contract by buying the barrel from the Saudi’s for 150 bucks and deliver it to you for two grand plus shipping.

Or, as is the way of people that speculate BEYOND WHAT THE MARKET WILL ACTUALLY BEAR, you will be force to default on the contract and not throw good money after bad. (I of course, either way, still get to keep what you paid for the worthless contract in the first place.

You said "When the front-month contract is about to expire (actually 2-3 weeks in front of that date), I sell it back and buy the same or more crude futures in a month further out."

You could do that, but as you, like everyone else are buying/selling from a broker, I can promise you that the stupid guy is not him. He is not going to buy back that bad contract with less time for as much or more than you paid for it from him in the first place. The contract will be posted on the exchange as worth very much less than it was rated two weeks ago. You don't just walk on the exchange floor and say "Hey guys, I got a contract for sale, any buyers for twice the rated value?

I don't know/care how rich you are, but on a highly margined account like futures, I suspect that following your strategy would turn a billionaire into a millionaire pretty fast. When you plunk down your contract for x and the price runs away from you you WILL get a margin call for +x from your broker once it grows beyond your credit line.

For those not in the know; With the margins of futures contracts, which work out as a dollar multiplier, you plunk down your dollar and control fifty bucks worth of x. You win a buck, its great, your account is now worth Forty Nine Bucks. You loose a dime, and your broker calls you on the phone and says, deposit five more bucks today or I close your account.

I shudder to think of your problems if you loose instead of gain that buck. For a buck, you lost fifty one, and with a 1500 buck contract at a fifty to one margin on a thousand barrels You will end up having to mortgage your house to make the margin call. How long do you think you are going to last loosing on 1000 barrel contracts month after month? Not even Bill Gates can keep that up for long.

Speculators only win when at the end of the month they speculated right, they LOOSE when they GUESS WRONG. (Go figure). And guess what, when you run out of cash to pour into your sinking account, your Broker Will stop answering the phone. That is, once you have made your final margin call...

There is no win/win market, or we would all be trillion-airs... Speculators cause high prices like flys cause garbage.