Posted on 06/06/2008 8:49:50 AM PDT by Entrepreneur
Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.
The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.
The CFTC has also waived regulations over the past decade on U.S. investors who trade commodities on some overseas markets, freeing those investors to accumulate large quantities of the future oil supply by making purchases on lightly regulated foreign exchanges.
(Excerpt) Read more at washingtonpost.com ...
You gotta be kidding me!
"Speculators" are not storing oil to artificially increase price. They're inserting themselves in the marketing chain in a quite normal way...which drives up prices faster than would be the case if they weren't participants. That's all.
Exactly....word to the wise....take what these traders here say with a grain of salt and your fingers holding your nose...they have their own agenda...not a good source for commodities market information in our current situation...
Is that a good source for information?...best to go to those with no conflict of interest....analysts from outside...
One of the most specious arguments they come up with is that the speculators provide “liquidity”. Yes, liquidity is a good thing, but where speculators are actually needed is where you have a product that has a limited market and it is difficult for the seller and the buyer to get together or where the seller needs an infusion of cash before they deliver the product. However, there is no difficulty in getting the seller and buyers of crude oil together nor do the oil producers need an infusion of cash. In fact the oil producers are swimming in an ocean of cash due to speculators.
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