from naked capitalism by Yves Smith

Since roughly February, a solid minority of commentarors, including this blogger, have questioned the thesis that the rapid increase in oil prices was solely the function of supply and demand. It was disconcerting to see what reactions this stance elicited. There was often an unwillingness to read what was written, and instead turn the post into an exercise in projection. Use of the word “speculator” is taken to mean the author 1. thinks speculation is bad (no, depends on circumstances), 2. is economically illiterate and 3. is a Peak Oil denier (a lot of vitriol here).

http://www.nakedcapitalism.com/2008/08/quelle-surprise-speculators-may-have.html

“If regulators really wanted to limit speculation in the oil market, they should keep the shorter-term futures contracts and eliminate the more speculative six-month futures contracts.”

That’s the conclusion of a recent paper by Lonnie Stevans and David Sessions of the Frank G. Zarb School of Business, who also found that:

“For model specifications with short-term futures contracts, supply does indeed dominate price movements in the crude oil market. However, for specifications including longer-term contracts that are inherently more speculative, the real price of oil appears to be determined predominantly by the futures price. Moreover, there is empirical evidence of hoarding in the crude oil market: both oil stocks/inventories and futures prices are found to be positively cointegrated/correlated with each other.”

http://ftalphaville.ft.com/blog/2008/08/13/15053/much-ado-about-oil-speculation/

http://blogs.ft.com/maverecon/2008/07/welcome-to-a-world-with-500-oil/#more-276

By Michael Gordon

Published: July 1 2008 03:00 | Last updated: July 1 2008 03:00

Debate has raged as to whether rising commodity prices owe more to the actions of speculators and less to an imbalance in supply and demand. Speculators have not come out well in this debate – not surprising in light of the food riots in developing nations and fuel protests in developed ones.

http://www.ft.com/cms/s/0/4edc42be-4708-11dd-876a-0000779fd2ac.html?nclick_check=1

By Javier Blas

Published: June 9 2008 22:56 | Last updated: June 9 2008 22:56

For once, many speculators were caught on the wrong side of the oil market.

After being accused by US lawmakers of profiting from rising prices and driving energy costs higher, some speculators lost serious money last Thursday and Friday when prices jumped by a staggering $16.24 a barrel to a record $139.12 in less than 36 hours. …..

http://www.ft.com/cms/s/0/e34d30e0-366c-11dd-8bb8-0000779fd2ac.html

LOL