The WSJ, fails, as always, to actually understand how “oil futures” are actually being traded.
They also are pointing to an ag commodity which isn’t well commoditized, ie, onions.
When you look at the ag commodities, there are specifications for what the commodity is - eg, the test weight (lbs per bushel) and moisture content of grain (wheat, corn, beans, etc).
Onions aren’t quite so uniform, for starters. I’m sure it could be done, but there would have to be some give on both sides - on the contract specs as well as by the farmers growing onions.
Throughout this whole “speculators are to blame” and “they are not!” tit-for-tat, the WSJ has displayed deliberate ignorance that:
a) energy futures were exempted from the level of oversight by the CFTC that are given to ag futures
b) the rise of cash-only futures exchanges like ICE
c) that the same legislation that enabled the energy speculators to effect Enron’s manipulation of power prices, Amaranth’s manipulation of natural gas futures is still in place, and that if there have been two successful manipulations of price in less than 10 years, the burden of proof here shifts to proving that oil specs aren’t to blame here. “Trust us” no longer quite seems to work when there are two cases of maniupulation under the CFMA.
d) CFMA also opened up the market in financial derivatives trading, and probably has a role in the current credit market problems.
The WSJ is simply carrying water for the financial industry here, just as they’re bucket boys for businesses who want illegal immigration for cheap labor.
Same with Crude Oil. The variation is large in qualities available, specifically with sulfur content and API gravity. That is why it is included in the NYMEX specification and includes some pre-agreed pricing variations.