Der Spiegel: Speculators holding up to 45% of all oil contracts.

[bulloney]

Ain't capitalism great?

According to Der Spiegel, the reason for the current surge is oil prices is not supply and demand. It's pure speculative investing.

The report stated that huge amounts of U.S. pension funds are being invested in oil stocks, driving up the price of a barrel of oil to record amounts. The investments are leaving housing credit investments such as Fannie Mae or Freddie Mac because of the precarious housing market.

It's being described as an oil pricing bubble that will burst, which could still damage the U.S. economy if such huge amounts of these pensions are tied to the market.

Meanwhile, U.S. consumers are paying record amounts of money for fueling their vehicles and everything else tied to energy.

This begs the question: Is unbridled capitalism really the panacea that free-marketers make it out to be, when something as vital to our national security as energy are susceptible to the whims of speculators?

I'm not a socialist or anything like that, but everything needs some type of accountability, especially when national security is on the line.

[Captain Angry]

1. Who would watch over the speculators in Hong Kong and London?

Oil is expensive for every country in the world, it's not just us.

We just live in a country where most people think they have to have a car under them for hours at a time, and that wanting mass transit makes us a commie.

Oil prices wouldn't matter if we cut our consumption in a big way.

[WCGreen]

2. Oil is traded in dollars....

That is why it matters to everyone around the world...

[Warpy]

3. Oil isn't the only commodity

Big money has moved from real estate to the stock market and now to commodities. They're not only creating a speculative bubble in oil prices, they're also doing the same to wheat, rice, and metals.

The only thing we can say for certain about these bubbles is that eventually they will burst, but the question is how many people are going to be badly hurt in the meantime.

Expect riots worldwide.

[bbinacan]

5. Good point

when the speculators who are long decide to unwind their positions for profit, we could see a big drop in the price of oil.

[madrchsod]

4. well duh....i thought it would be higher than that

what goes up comes back down...

[selador]

6. speculative TRADING

first of all specs, are PART of the supply/demand curve. always have been, always will be.

2nd of all, we don't have UNBRIDLED CAPITALISM. we have highly regulated capitalism

i TRADE futures (although not so often oil ones) and let me tell you, it's regulated. i'm a speculator (and an investor). so, i put capital at risk on my "whims" and that's my right - to be engaged in the markets. that's what a free (yet regulated) market means. no central control. do you think a centrally controlled market would be BETTER?

here's the ACTUAL
http://futures.tradingcharts.com/cotcharts/CL

reports on spec vs. non-spec (the commercials are non-spec) just to show you the trend.

iow, my opinion is that i don't think it's a problem. yes, it can contribute to a bubble. that's a price we pay for having a non-centralized control market.

if you want to see what a spec can do trying to corner a commodity market, google "hunt brothers" with the realization that the silver market in those days was much much much smaller than the oil market.


and since crude floats worldwide, US traders (even bolling) are only a part of the trade volume.