Oil Speculators-The Price Driver
I have suspected that speculators in the market are the cause of oil’s
high flying ways recently. Someone else agrees with me.
Still in a speculative frenzy, oil prices continue to churn upward, heading for $109 bbl. Meanwhile, the cost of a gallon of gasoline is likely to hit $4 a gallon by Memorial Day in many parts of the country:
Rick Moran puts some numbers to my suspicions.
Many private forecasters attribute high prices to manipulation by the Organization of Petroleum Exporting Countries and speculation in the oil market, which reached record levels in the first quarter. Joe Stanislaw, an independent energy adviser to Deloitte & Touche, calculates that the physical realities of supply and demand point to an oil price of $50 a barrel.The possibility of supply disruptions due to political strife in Iran, Venezuela and Nigeria might add another $10. Anything above that, he argues, is due to oil’s popularity as an investment.
