Data emerging on players in the commodities markets show that speculators are a larger piece of the oil market than previously known, a development enlivening an already tense election-year debate about traders’ influence.
Last month, the main U.S. regulator of commodities trading, the Commodity Futures Trading Commission, reclassified a large unidentified oil trader as a “noncommercial” speculator.
The move changed many analysts’ perceptions of the oil market from a more diversified marketplace to one with a heavier-than-thought concentration of financial players who punt on big bets.
As a result, the number of futures and options contracts held by traders counted as speculators — those who don’t have a commercial need to mitigate the risks of energy prices in their business — rose to 49% of all crude-oil bets outstanding on the New York Mercantile Exchange, up from 38%.
We can probably label this one as a “See I told you so” moment. Certainly speculators were identified in these spaces as part of the problem at the off. We said when this rocket ride started that this was not being driven by supply and demand issues. We told you at the time that George Soros was most certainly behind a good deal of the money being played here. So far, I’ve seen nothing to put me off that particular scent. So, none of this is a surprise at all.
As a matter of fact, if there’s anything that is surprising about any of this, it’s that the Wall Street Journal decided to put this online.
Whereas I am quite sure that the Democrats are going to be calling for regulation on the trading industry, what really needs to happen here is the Democrats need to come on board with the rest of us and start creating an environment where oil is in no question of being in plentiful supply. the traders, after all, are simply reacting to market stimuli, which Democrats seemingly are willingly clueless about.