Oil speculators played prices like a yo-yo, says new report

"Speculation by large investors — and not supply and demand for oil — were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday," the Associated Press reports.

Speculators "poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July," the AP says. "Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said."

""We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, which wrote the report.

Among those speculators, as readers of prior Fueling Station posts may recall, is Vitol, which last year pleaded guilty to paying secret kickbacks to the Iraqi government in exchange for oil under the United Nations' scandal-ridden oil-for-food program.

But the biggest players of the oil price yo-yo, says Bloomberg News, are far better known firms: "JPMorgan Chase and Co., Goldman Sachs Group Inc., Barclays Plc and Morgan Stanley control 70 percent of the commodities swaps positions, and swaps dealers are the largest holders of Nymex crude oil futures contracts, Masters said. Representatives for all four banks declined to comment."

The agency that's supposed to be regulating those trades, the Commodity Futures Trading Commission, on Thursday issued its own report which, according to Reuters, said the CFTC "was not able to "quantify the amount of speculative trading occurring in the futures markets."

[St. Pete Times photo of yo-yo master David Keele by Scott Keeler]

--Craig Pittman

Comments

[Hear Ye]

Hear ye, hear ye. Hurricane Ike has caused a hike in gas prices and shortages. Guess what? Gov. CC could have signed an executive order to prevent this... he knew about this yesterday. Nothing.

OK... AG Bill McCollum has authority to stop gauging... nothing.

At Least Bro. Ch. Bronsen said we were OK... but guess what.. he could have signed an Exec. Order. Why, why, did three of our R-electorites who all have the authority to stop this madness did NOTHING!

Ms. Sink (who has no authority to stop gauging) stayed away from the media, too.

Hmm... something is rotten in Demark, aka as Florida.

Bless the Costo's and Sams who chose not to gauge people. Thank you.