Oil price Speculation, the Cat is out of the bag

I have written before about the relationship between speculation and oil prices over the last 12 months or so. We have read in the newspapers that speculation was not to blame for the rapid rise of oil prices to around $150 per barrel. Here is a quotation taken from The Times newspaper dated Tuesday, 28 October 2008, the speaker is Abdulla al Badri who is a senior executive at OPEC:

We just want to balance the market, he said. He blamed speculators for the spike in prices this year to a high of $147 a barrel on 11^th July. Hedge funds were using oil as an asset class, he said. The paper market was out of control will. Nobody was controlling it. We want to see a price that is driven by fundamentals not by speculators, he said.

Mister al Badri said he was not concerned about the risk that high oil prices could ultimately harm OPEC by undermining demand.

So now you know the truth … exactly what I have been saying all along.

DW