Speculators & Oil Price Spikes, Part II

Tuesday, May 27, 2008 | 07:18 AM

Why is it that market-worshipers claim fundamentals are responsible for equity prices, but speculators are to blame for Oil prices?

Bill King goes even further: "There is a fervid, global crusade, especially by politicians, to pin escalating oil prices on speculators."

On the other side of the argument, George Soros warns Speculators are largely responsible for driving crude prices to their peaks in recent weeks. And Germany has called for ban on oil speculation altogether. (See John Authors video here)

My own view is that speculators have contributed to the price to some degree, but the tight supplies and freefalling dollar get more blame.

This weekend, John Mauldin looked at a variety of factors impacting oil prices, and if you missed it over the long weekend, its worth a few minutes of your time.

Rather than adding to the noise, lets look at a few charts -- both pro and con -- that may reveal some insight as to the impact of speculators.


The Impact of Commodity Index on Spot Prices


Commodity Prices and the Weak Dollar


Not Widely Traded Commodities



This is only a brief survey, and I'm sure I missed some worthy links -- please add related articles in comments . . .


The Short View: Commodity speculation
John Authers
FT, May 20 2008 19:54

George Soros: rocketing oil price is a bubble
Edmund Conway,
Telegraph, 12:53am BST 27/05/2008  http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnsoros126.xml

Germany in call for ban on oil speculation   
Ambrose Evans-Pritchard
Telegraph, 12:53am BST 27/05/2008   http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml

Whither the Price of Oil?
John Mauldin   
Thoughts from the Frontline, May 23, 2008


Masters Capital Management
Committee on Homeland Security and Governmental Affairs  May 20, 2008   

High Oil Prices Spur Thoughts About Bubbles,But This Might Be Misguided
WSJ, May 27, 2008;

Energy Watchdog Warns Of Oil-Production Crunch 
WSJ, May 22, 2008;

Understanding crude oil prices
Econbrowser, May 24, 2008   

Commodities Investment Bubble May Burst by Yearend, Lehman Says 
Bloomberg, May 16, 2008   

Tuesday, May 27, 2008 | 07:18 AM | Permalink | Comments (25) | TrackBack (1)
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Tracked on May 27, 2008 9:56:24 AM


Some people blame supply/demand. Other people blame speculators. Then others blame a weak dollar. Each camp is entrenched in their position. Why can't it be a combination of all three?

IMO this is just the case. All of these factors are responsible for the rise of oil. I think the real question is which one of these factors will prove the most influential in the longterm.

Posted by: Entropy | May 27, 2008 7:41:20 AM

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